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An  Outline  of  the 

Economic  Development  of  the 

United  States 


REVISED  EDITION 


NEW  YORK  CHAPTER 

AMERICAN  INSTITUTE  OF  BANKING 

New  York,  1924 


An  Outline  of  the 

Economic  Development  of  the 

United  States 


By  EDWARD  MEAD  EARLE 

Assistant  Professor  of  History,  Columbia  University 

Educational  Supervisor,  New  York  Chapter   of  the 

American  Institute  of  Banking 


REVISED  EDITION 


NEW  YORK  CHAPTER 

AMERICAN  INSTITUTE  OF  BANKING 

New  York,  1924 


/03 


FIRST  EDITION,  Copyright  1921 


REVISED  EDITION  1924 

by 

NEW  YORK  CHAPTER,  INC. 
AMERICAN  INSTITUTE  OF  BANKING 


INTRODUCTORY  NOTE 

THE  story  of  the  development  of  the  United  States  from 
the  thirteen  colonies  to  a  modern  industrial  world  power 
is  one  which  loses  none  of  its  fascination  in  the  telling. 
As  here   outlined,   it  has   been   studied  by   students  in  New 
York  Chapter  of  the  American  Institute  of  Banking  for  several 
years.    Teaching  experience  has  demonstrated  that  the  present 
method  of  approach  is  sufficiently  satisfactory  to  require  only  a 
few  minor  changes  in  the  Outline  since  its  original  publication 
in  1921. 

In  connection  with  each  section  of  the  topical  outline  the 
instructor  will  assign  text-book  readings.  The  student  who  has 
the  time  and  disposition,  however,  will  find  it  valuable  to  read 
additional  material  on  the  subjects  of  classroom  discussion.  As 
an  aid  in  the  selection  of  supplementary  readings,  suggestions 
have  been  appended  to  each  main  division  of  the  outline.  A  list 
of  the  books  thus  cited  follows : 

Beard,  C.  A.  and  M.  R.,  History  of  the  United  States   (1921). 

Cited  as  Beard. 
Bogart,    E.    L.,    The   Economic   History   of   the    United   States 

(Revised  Edition,  1923).     Cited  as  Bogart. 
Dewey,  D.  R.,  Financial  History  of  the  United  States  (Revised 

Edition,  1922).     Cited  as  Dewey. 
Lippincott,    I.,    Economic   Development    of    the    United    States 

(1921).     Cited  as  Lippincott. 
Magee,  J.  S.,  Introduction  to  Economic  Problems  (1922).    Cited 

as  Magee. 
Thompson,  C.  M.,  History  of  the  United  States,  Political,  Social, 

Economic  (Revised  Edition,  1922).     Cited  as  Thompson. 
Van  Metre,  T.,  Economic  History  of  the  United  States  (1921). 

Cited  as  Van  Metre. 
West,  W.  M.,  History  of  the  American  People  (1918).    Cited  as 

West. 
White,  H.,  Money  and  Banking  (Fifth  Edition,  1914).    Cited  as 

White. 

To  the  student  who  wishes  to  acquire  a  small  library  dealing 
with  the  history  of  the  United  States  the  following  books  are 
recommended  in  addition  to  those  previously  cited :  D.  S.  Muzzey, 
The  United  States  of  America,  in  two  volumes  (1924) ;  William 
MacDonald,  Three  Centuries  of  American  Democracy  (1923) ; 
Max  Farrand,  The  Development  of  the  United  States  from 
Colonies  to  a  World  Power  (1918).  A  small  series  of  works  on 
American  history  is  the  admirable  Riverside  History  of  the 
United  States  in  four  compact  volumes. 

It  is  a  pleasure  to  acknowledge  the  assistance  of  Dr.  Alfred 
C.  Bryan  and  Mr.  L.  Brewster  Smith  in  the  revision  of  this 
outline  and  to  pay  tribute  to  their  efficiency  and  their  contagious 
enthusiasm  in  their  work  as  instructors  in  New  York 
Chapter  of  the  American  Institute  of  Banking. 

EDWARD  MEAD  EARLE 
New  York,  May  1,  1924 

609042 


An  Outline  of  the 

Economic  Development  of  the 

United  States 

I.  THE  SCOPE  AND  IMPORTANCE  OF  ECONOMIC  HISTORY 

A.  Relationship  of  economic  history  to  economics. 

1.  Definition  of  economics. 

2.  Topics   included    in    economics;    problems   of   production,   ex- 
change, consumption,  distribution. 

3.  History  a  record  of  past  experiences:  the  value  of  considering 
contemporary  problems  in   relation  to  their  historical   back- 
ground. 

4.  Frequent  overemphasis  upon  political  and  military  history  at 
expense  of  adequate  consideration  of  economic  history. 

B.  The  world  of  to-day  compared  with  the  world  of  Columbus. 

1.  Economic  organization  of  the  sixteenth  century  compared  with 
that  of  the  twentieth  century. 

Relative  importance  of  agriculture,  commerce,  industry. 
Business  organization  and  methods. 

Social  conditions:   the  medieval  manor  and  town  contrasted 
with  the  modern  farm  and  industrial  city. 

2.  These  remarkable  changes  can  be  understood  and  appreciated 
only  by  a  consideration  of  how  they  came  about. 

3.  The  phenomenal  development  of  America  since  its  discovery. 

C.  Factors    in    the    economic    development    of    the    American 

people. 

1.  Natural  resources  of  the  land. 

Climate,  soil,  plant  and  animal  life. 

Mineral  wealth. 

Coast  line  and  navigable  rivers. 

2.  The  American  people  and  American  institutions. 

Influence  of  American  political  institutions. 

The  importance  of  education  and  social  institutions. 

D.  Outline  of  the  purposes  and  plan  of  the  course. 

Van  Metre,  Chap.  I;  Lippincott,  Chap.  I. 

II.  THE  EUROPEAN  BACKGROUND  OF  AMERICAN  HISTORY 

A.  European   commerce   and   industry   in   the   later   fifteenth 
century. 

1.  Trade  with  the  Orient:   its  extent  and  importance. 

2.  Problems  of  transportation:  the  trade  routes  to  the  East. 

3.  Industry  under  the  gilds. 

5 


ECONOMIC  DEVELOPMENT  OF  UNITED  STATES 


Economic     motives     for     exploration:     the      Commercial 
Revolution. 

1.  Aids  to  exploration. 

a.  Progress  of  geographical  knowledge. 

b.  Development  of  navigation:  maps  and  nautical  instruments. 

c.  Invention  of  printing. 

2.  Desire  of  the  Spaniards  and  Portuguese  for  new  trade  routes. 

3.  The  era  of  exploration:     "The   discovery  of  America  an  ac- 
cident." 

,4.  Role  of  the  trading  companies. 
*  5.  Rise  of  national  monarchies  and  need  of  royal  revenues. 

C.  Economic  motives  for  colonization. 

1.  Motives  of  the  individual  colonist. 

a.  The  desire  for  riches  and  the  spirit  of  adventure. 

b.  Relief  from  pressing  economic  misery  at  home:   unemploy- 
ment prevalent  after  changes  in  agricultural  methods,  for 
example. 

c.  Promise  of  a  sure  and  happy  living  in  a  new  country  rich 
in  opportunities. 

2.  Motives  of  the  colonizing  nations. 

a.  Colonies  as  a  source  of  supply  for  the  national  stock  of  gold 
and  silver. 

b.  As  a  source  of  supply  for  raw  materials. 
^c.  As  a  market  for  manufactured  articles. 

d.  As  an  outlet  for  "surplus  population." 

3.  The  economic  motives  for  colonization  must  not  be  allowed, 
however,  to  obscure  the  importance  of  other  motives. 

a.  Political:   national  and  dynastic  rivalries. 

b.  Religious. 

1.  The  missionaries. 

2.  Desire  to  escape  religious  persecution. 

D.  The  colonization  of  North  America. 

1.  Failure  of  the  rivals  of  England  in  the  appropriation  of  the 
New  World. 

a.  Faulty  colonial  policy  of  Spain. 

b.  Failure  of  the  Dutch  in  New  Netherlands. 

c.  The  rise  and  fall  of  the  French  colonial  empire. 

2.  The  success  of  the  English  as  colonizers. 

a.  Reasons  for  this  success. 

1.  Attitude  of  the  home  government. 

2.  Character  of  the  settlers. 

3.  Homogeneity  and  compactness  of  settlements. 

b.  Establishment  of  the  thirteen  English  colonies. 

Van  Metre,  Chaps.  II  and  III.  Thompson,  Chaps.  I  and  II;  Lip- 
pincott,  Chap.  Ill;  Bogart,  Chap.  I. 

III.  COLONIAL  AMERICA,  SOCIAL  AND  ECONOMIC 

A.  Predominance  of  agriculture  over  all  other  occupations  of 
the  English  colonists. 
1.  Primitive  agricultural  methods  in  the  colonies. 

a.  Modelled  on  backward  European  methods. 

b.  Crude  implements,  showing  practically  no  improvement  over 
those  used  thousands  of  years  before. 

c.  "Earth  butchery":   failure  to  preserve  qualities  of  soil  by 
rotation  or  fertilization. 

d.  Indian  culture. 


6 


k 


COLONIAL  AMERICA 


2.  Experimentation  and  adaptation. 

a.  Successful  introduction  of  European  crops. 

b.  Native  American  plants  of  the  utmost  importance. 

1.  Indian  corn,  the  potato,  timothy,  pumpkin  and  squash,  etc. 

2.  Tobacco. 

c.  Other  crops  successfully  grown:  rice,  cotton,  indigo. 
Characteristics  of  colonial  agriculture:  sectional  differences. 

a.  New  England. 

1.  Comparatively  poorly  adapted  to  agriculture. 
Poor  soil  and  short  season  for  cultivation. 
Required  intensive  cultivation. 

2.  The  New  England  farm  a  self-sufficing  economic  unit. 

b.  Middle  colonies. 

1.  Better   soil   and   better    supply   of  labor   responsible  for 
larger  holdings. 

c.  The  Southern  colonies  and  the  plantation  system. 

d.  Social  and  economic  effects  of  these  sectional  differences, 
particularly  as  regards  land  tenure  and  systems  of  labor. 


I    B.  Colonial  industries. 

1.  Lumbering,  shipbuilding,  naval  stores. 

2.  Pishing. 

a.  Influence  of  fishing  in  development  of  American  sea-going 
commerce. 

3.  Pur-trading. 

a.  Importance  to  the  colony  of  New  York. 

b.  Influence  as  initial  incentive  to  westward  expansion. 
L  The  household  industries  and  their  importance. 

5.  Other  industries:   textile  manufactures,  iron,  hats,  rum. 

xC-  Colonial  commerce. 

1.  Local  trade.  W 

2.  Obstacles  to  intercolonial  trade. 

3.  The  development  of  foreign  commerce. 

^D.  Colonial  money  and  banking. 

1.  Scarcity  of  money  and  the  reliance  upon  barter^ 

2.  Colonial  monetary  experiments:  commodity  money, 
a.  Wampjum  and  other  experiments  in  New  England. 

*  b.  Tobacco  and  rice  as  monetary  standards  in  the  South. 

c.  Purs  as  money  in  New  York. 

3.  The  deficiencies  of  colonial  commodity  moneys. 

4.  Circulating  media  in  the  colonies. 

a.  Coins:   English  coins;   the  Spanish  dollar;   "pine  tree  shill- 
ing;" etc. 

b.  Paper  money:  bills  of  credit,  public  and  private. 

5.  Colonial  "banking."    .  t\ 

E.  Colonial  labor  problems. 

Is  Scarcity  of  hired  labor;  abundance  of  free  land  and  consequent 
ability  of  all  but  least  resourceful  to  become  independent 
farmers. 

2.  White  servitude  in  the  colonies. 

a.  Classes  of  indented  servants:  voluntary  and  involuntary. 

b.  Advantages  and  disadvantages  of  indented  servitude. 

3.  Beginnings  of  negro  slavery, 
a.  Growth  of  the  slave  trade. 

^b.  Territorial  distribution  of  negro  slaves. 

7 


ECONOMIC  DEVELOPMENT  OF  UNITED  STATES 

F.  Social  conditions  in  the  colonies. 

1.  Rapid  growth  of  population  in  the  English  colonies. 

2.  Foundation  of  education  in  America. 

a.  Leadership  of  the  churches:  Harvard,  Yale,  Dartmouth,  Co- 
lumbia, William  and  Mary,  and  other  colleges  founded  as 
religious  institutions. 

b.  Progress  of  the  idea  of  compulsory  education. 

3.  Social  institutions. 

a.  Social  distinctions  and  aristocracy:  contrast  between  North 
and  South  in  this  respect. 

b.  Colonial  ideas  of  "liberty"  and  "democracy." 

Van  Metre,  Chaps.  IV  and  VI;  Lippincott,  Chap.  IV;  Beard,  Chaps. 
II  and  III;  Thompson,  Chaps.  Ill  and  IV;  Bogart,  Part  I. 

IV.  BRITISH  COLONIAL  POLICY  AND  ITS  CONSEQUENCES 

A.  Factors  contributing  to  the  development  of  mercantilism  in 

Europe  in  the  seventeenth  and  eighteenth  centuries. 

1.  Political   conditions:    growth  of  powerful  nations  of  the  At- 
lantic seaboard;  religious,  dynastic,  colonial  wars;  dependence 
of  kings  upon  money  rather  than  feudal  dues. 

2.  Economic  conditions:  .expansion  of  commerce  and  industry;  in- 
crease in  population;    more  extended  use   of  money  and   de- 
creasing reliance  upon  barter. 

B.  The  tenets  of  mercantilism. 

1.  Importance   of  amassing   and   maintaining   national   stock   of 
gold  and  silver. 

2.  Encouragement .  of  national  shipping, 
a.  For  increasing  naval  strength. 

t>.  For  maintenance  of  "favorable  balance  of  trade." 

3.  Promotion  of  agricultural  self-sufficiency. 

4.  Encouragement  of  manufacturing  and  export  trade. 

C.  The  implications  of  mercantilism. 

1.  Colonies  exist  for  the  benefit  of  the  mother  country. 

2.  Colonies  therefore  obliged  to  regulate  their  economic  activities 
in  the  interest  of  self-sufficiency  and  economic  power  of  mother 
country. 

D.  The  operation  of  mercantilism  in  the  English  colonies  in 

America. 

1.  Effects  on  colonial  shipping  and  commerce. 

a.  The  Navigation  Acts. 

b.  Interference  with  intercolonial  trade. 

c.  Limitations  on  foreign  commerce:   "enumerated"  and  "non- 
enumerated  articles." 

d.  The  Molasses  Act  of  1733. 

e.  Summary  of  effect  on  colonial  commerce.  Help  or  hindrance? 

2.  Colonial  agriculture  and  the  mercantilist  system. 

3.  Mercantilist  restrictions  on  colonial  manufacturing. 

a.  Discouragement  and  prohibition  of  industries  likely  to  com- 
pete with  English  goods  in  the  colonial  market  or  abroad. 

b.  Bounties  and  preferential  tariffs  on  certain  products  con- 
sidered essential  to  mother  country. 

c.  Estimate  of  the  extent  to  which  these  restrictions  consti- 
tuted an  economic  hardship  to  the  colonists. 

4.  Colonial  disregard  for  the  mercantilist  regulations:  smuggling. 
British  policy  of  "salutary  neglect"  in  enforcement  of  the  law. 

8 


THE  AMERICAN  REVOLUTION 


E.  The  mercantilist  system  paves  the  way  for  the  American 
Revolution. 

1.  Accession  of  George  III  (1760)  and  his  attitude  toward  colonial 
government  and  "salutary  neglect." 

2.  Effects    of   the    French    and    Indian   War    (1754-1763).      The 
problem  of  taxation. 

3.  Effect  of  economic  conditions  in  England. 

Van  Metre,  Chaps.  V  and  VII;  Bogart,  Chaps.  VI  and  VII;  Lip- 
pincott,  Chap.  V;  Thompson,  Chaps.  V  and  VI. 


V.  ECONOMIC  PHASES  OF  THE  AMERICAN  REVOLUTION 

A.  A  consideration  of  the  economic  causes  of  the  Revolution. 

1.  Colonial    resistance    to   the   enforcement   of   the   mercantilist 
regulations. 

a.  The  Stamp  Act,  1765,  and  the  powerful  interests  it  affected 
— newspaper  publishers,  lawyers,  merchants,  bankers. 

b.  The  cry   of   "Taxation   without  Representation";    the  non- 
importation agreements. 

c.  Increasing  agitation  against  enforcement. 

2.  Extent  to  which  political  factors  increased  colonial  discontent. 

3.  Failure  of  British  attempts  at  conciliation  and  the  beginnings 
of  organized  resistance.    The  First  Continental  Congress,  1774. 

4.  Outbreak  of  the  Revolution.     "Taxation  without  Representa- 
tion" or  "No  Taxation?" 

B.  Fiscal  history  of  the  Revolutionary  period. 

1.  Financial  chaos  at  the  outbreak  of  hostilities. 

2.  Methods  of  financing  the  war. 

a.  "The  Continentals." 

Amounts  issued  by  nation  and  states. 

Depreciation  and  attempts  to  arrest  it. 

Effects  of  the  Continentals  on  economic  conditions. 

b.  State  requisitions  and  taxation. 

c.  Domestic  and  foreign  loans. 

d.  Futile  attempts  to  secure  national  taxes. 

3.  Robert  Morris,  financier  and  statesman. 

a.  Services  of  Robert   Morris  as   Superintendent   of  Finance, 
1781-1784. 

b.  The  organization  and  success  of  the  Bank  of  North  America. 
Its   foundation,    1781,    marks    the    beginning    of   American    - 
banking. 

C.  Industrial  conditions  during  the  war. 

1.  Isolation    as    an    encouragement    to    agriculture    and    manu- 
facturing. 

2.  Commerce  and  "privateering." 

3.  General    economic    conditions    unsatisfactory    because    of   un- 
stable currency. 

D.  Unsatisfactory  character  of  the  Confederation  a  handicap  to 

economic  progress. 
Van  Metre,  Chap.  VIII;    Thompson,  Chap.  VII;   Beard,  Chap.  V. 

VI.  THE  NEW  NATION  AND  ITS  PROBLEMS 

A.  Economic   and   political   readjustment   during   the   critical 
period  1783-1789. 

1.  Defects  of  the  Articles  of  Confederation. 

9 


ECONOMIC  DEVELOPMENT  OF  UNITED  STATES 

a.  Impotence  of  Congress  and  excess  power  of  states  in  matters 
of  finance,  commerce,  industry,  foreign  affairs. 

b.  Inherent  defects  of  organization;   consequent  governmental 
inefficiency. 

2.  Economic  conditions  making  imperative  the  adoption  of  a  new 
constitution. 

a.  Collapse  of  the  national  credit. 

b.  Depreciation  of  the  currency:  the  question  of  "hard"  versus 
"soft"  money;  Shay's  Rebellion. 

c.  Question  of  protection  to  American  commerce  and  industry. 

d.  Interstate     trade     restrictions     hampering     economic     de- 
velopment. 

3.  The  adoption  of  a  new  Constitution. 

a.  Character   of   the   Annapolis   Convention   of   1786    and   the 
Federal  Constitutional  Convention  of  1787. 

b.  The  framing  of  the  Constitution  and  its  adoption  by  the 
States. 

4.  Provisions   of   the    new    Constitution   of   great    economic    im- 

portance. 

a.  Far-reaching  powers  of  Congress  in  the  regulation  of  finance, 
industry,  interstate  and  foreign  commerce. 

b.  Significant  limitations  on  the  powers  of  the  states. 

B.  Certain  outstanding  facts  of  the  economic  situation  in  1789. 

1.  Population. 

a.  Total  number  about  4,000,000   of  whom  1/6  were  negroes. 

b.  Distribution. 

Relative  position  of  North  and  South  and  West. 

The  cities:  only  6  with  a  population  in  excess  of  7,500;  New 

York  largest  with  33,000. 

2.  Agriculture  still  the  basic  industry,  occupying  some  90%  of 
the  population. 

3.  Hamilton's  reports  as  indicating  the  character  of  the  problems 
facing  the  new  government. 

C.  Governmental  protection  to  American  shipping. 

1.  Protective  features  of  the  Navigation  Act  of  1789;  preferential 
features  of  the  Tariff  Act  of  1789;  protection  to  American  sea- 
men by  act  of  1790. 

2.  Effects  of  this  legislation. 

D.  Protection  and  stimulation  of  American  industries. 

1.  American  market  flooded  with  foreign  goods  after  the  war. 

2.  Protective  features  of  the  tariff  of  1789. 

3.  Patent  Law  of  1790. 

4.  Hamilton's  Report  on  the  Manufactures  advocates  a  construc- 
tive policy  toward  American  industry. 

E.  Problems  of  public  finance  and  their  solution. 

1.  Establishing  the  national  credit. 

a.  Funding  and  redemption  of  the  domestic  and  foreigft  debt. 

b.  Solution  of  the  problem  of  certificates  of  indebtedness  and 
bills  of  credit. 

2.  Establishment  of  a  monetary  system:   the  Mint  and  Coinage 
.  Act  of  1792. 

3.  Provision  of  a  national  revenue. 

a.  Revenue  features  of  the  Tariff  and  the  Navigation  Act  of 
1789. 

b.  Excise  duties  and  direct  taxes.    Unpopularity  of  these  taxas: 
the  Whiskey  Tax,  1791,  and  the  Whiskey  Rebellion,  1794. 

10 


_  STRUGGLE  FOR  ECONOMIC  INDEPENDENCE  _ 

4.  Establishment  of  a  banking  system  (treated  fully  in  Section 
IX  below). 

a.  Banks  of  New  York,  North  America,  and  Massachusetts. 

b.  Establishment  of  the  First  Bank  of  the  United  States,  1791. 

Van  Metre,  Chaps,  IX  and  X;  Thompson,  Chap.  VIII;  Lippincott, 
Chap.  VI;  Beard,  Chap.  VII;  Dewey,  Ohap.  III. 

VII.  THE  STRUGGLE  FOR  ECONOMIC  INDEPENDENCE,  1789-1815 

A.  European  affairs  and  their  effects  upon  American  economic 

life. 

1.  The  upheaval  in  Europe  occasioned  by  the  French  Revolution 
and  the  Napoleonic  Wars. 

2.  Initial    effect   of   European   disturbances   on   American  condi- 
tions:  bright  pro&pects  during  first  years  of  the  new  nation, 
1789-1806. 

-  a.  Agricultural  prosperity:  great  increase  in  value  of  products 
because  of  wider  marKet  in  Europe;  consequent  increase  in 
land  values. 
b.  The   colossal    growth  of   the  carrying  trade   in   American 

ships. 
-c.  Beginnings  of  the  development  of  American  industry. 

3.  Bitterness  of  the  European  strife  compromises  American  in- 
terests. 

a.  As  early  as  17^3  Great  Britain  stopped  profitable  carrying 
trade  of  American  ships  between  West  Indies  and  France. 

b.  In  1806,  with  the  British  Orders  in  Council,  began  a  series 
of  invasions  of  the  rights  of  neutral  ships  at  sea:  Napoleon's 
Berlin  and  Milan  Decrees  and  the  retaliatory  British  Orders 
in  Council;  privateering  and  the  seizure  of  neutral  vessels; 
impressment  of  American  seamen. 

c.  Effect  of  these  measures   on  American  trade,   agriculture, 
industry. 

4.  Similarity  of  these  conditions  with  those  of  1914-1917. 

B.  American  retaliation  and  the  effort  to  preserve  neutrality. 

1.  The  Embargo  Act,  1807. 

a.  Effect  of  the  embargo  to  close  American   harbors  and  to 
allow    ships   to   remain    idle    and    products   to   rot   at   the 
wharves;  unemployment  of  men  and  capital. 

b.  Opposition  to  the  embargo  and  its  repeal,  1809. 

2.  The  Non-Intercourse  Act,  1809. 

a.  Prohibition  of  trade  with  the  belligerents. 

b.  Almost  as  disastrous  to  Americans  as  embargo,  but  without 
perceptible  effect  upon  warring  nations. 

3.  Failure  of  other  measures  of  retaliation,  such  as  arming  of 
merchantmen. 

C.  The  Second  War  with  Great  Britain,  1812-1814. 

Van  Metre,  Chap.  XI;  Bogart,  Chap.  VIII;  Thompson,  Chap.  IX. 

VIII.  INDUSTRIAL  DEVELOPMENT,  1806-1860 

A.  The  American  Industrial  Revolution. 

1.  Reasons    for    the    slow    development    of    American    industry, 


a.  High  cost  of  labor  and  scarcity  of  capital  in  United  States. 

b.  Abundance  of  free  land. 

c.  Profitable  opportunities  in  agriculture  and  commerce. 

11 


ECONOMIC  DEVELOPMENT  OF  UNITED  STATES 

2.  "Industrial  .Isolation,"  1807-1815,  and  its  results. 

a.  Isolation  from  Europe  provides  opportunity  for  American 
goods  to  replace  those  formerly  imported. 

to.  Embargo  and  Non-Intercourse  Acts  caused  stagnation  in 
commerce  and  losses  in  agriculture;  labor  and  capital  di- 
verted to  manufacturing. 

c.  The  War  of  1812-1814  completes  industrial  isolation  and 
supplies  additional  impetus  to  industry  in  the  demand  for 
war  materials. 

3.  What  is  meant  by  the  term  Industrial  Revolution. 

a.  A  great  increase  in  industrial  production. 

b.  Changes  in  the  methods  of  production. 

4.  General  features  of  the  American  Industrial  Revolution. 

a.  Tremendous  development  of  certain  industries,  notably  the 
textile  and  iron  and  steel  industries. 

b.  Abandonment  of  the   domestic   system   in   these  industries 
and  the  beginnings  of  the  factory  system;   introduction  of 
machinery. 

B.  Phenomenal  development  of  certain  industries. 

1.  The  textile  industries:  manufactures  of  cotton  and  wool. 

a.  Importance  of  the  invention  of  cotton  gin  by  Eli  Whitney 
(1793). 

b.  Subsequent    introduction    of    machines    from    England,    in 
spite  of  English  embargo  on  their  export. 

c.  Tremendous   growth    in   production   of   cotton   and   woolen 
goods. 

d.  Rapid   rise   of    factory   towns   devoted   to    manufacture   of 
textiles. 

e.  Effect  of  development  of  textile  industries  on  prosperity  of 
the  South  and  the  settlement  of  the  West. 

2.  The  coal  and  iron  industries. 

a.  Centered     in     anthracite     coal     fields:     early     growth     of 
Pittsburgh. 

b.  Factors  in  growth  of  iron  industry. 

Great  natural  resources. 

Influence  of  the  railroads  and  the  demand  for  rails  and 
other  equipment;  demand  of  the  new  factories  for  tools, 
machinery,  hardware. 

Demand  for  agricultural  implements  increased  as  settle- 
ment of  West  proceeded. 

*  C.  Social  effects  of  the  Industrial  Revolution. 

1.  Development  of  an  employee  class  in  the  factory  industries. 

2.  Growth  of  factory  towns. 

3.  Stimulation  to  immigration. 

4.  Replacement  of  skilled  by  unskilled  labor. 

D.  Government  protection  of  manufacturing. 

1.  Demands  for  protection  of  "infant  industries"  after  the  war; 
the  Tariff  Act  of  1816. 

2.  Policy  of  increasing  tariff  protection. 

a.  The  Act  of  1821. 

b.  The  "Tariff  of  Abominations,"  1828. 

c.  The  Act  of  1832. 

3.  The  compromise  Tariff  of  1833. 

4.  A  temporary  epoch  of  free  trade,  1846-1860. 
a.  Economic  conditions  during  this  period. 

5.  Consideration  of  relations  between  this  protective  policy  and 
the  industrial  progress  of  the  nation. 

Van    Metre,    Chaps.    XII    and    XIII;    Bogart,    Chaps.    X,    XI; 
Thompson,  Chap.  XII;  Lippincott,  Chap.  IX. 

12 


BANKS  OF  THE  UNITED  STATES 


IX.  FINANCIAL  DEVELOPMENT,  1789-1860 

A.  Review  of  the  financial  situation  in  the  United  States  in  1789. 

1.  Limited  banking  facilities. 

2.  Absence  of  a  uniform  currency  of  stable  value. 

3.  Unsatisfactory  state  of  the  national  credit. 

4.  The  arguments  for  a  national  bank  as  set  forth  by  Hamilton's 
Report  of  1790. 

B.  The  First  Bank  of  the  United  States,  1791-1811. 

1.  Opposition  in  Congress  to  establishment  of  the  Bank  gradu- 
ally overcome. 

2.  Established  by  law  of  February,  1791. 

3.  The  Bank  in  operation. 

a.  Chief  features  of  its  charter. 

b.  Main  office  opened  in  Philadelphia,  December,  1791;  branches 
in  eight  other  cities  soon  after. 

c.  Great  financial  success  of  the  Bank  from  very  start. 

4.  The  Bank  as  a  national  asset. 

a.  Its  services  to  the  federal  government. 

b.  Its  services  to  the  business  community. 

c.  Its  establishment  of  a  stable  circulating  currency. 
6.  Opposition  to  the  renewal  of  the  Bank's  charter. 

a.  Antagonism  of  the  state  banks. 

b.  Political  considerations. 
6.  Dissolution  and  liquidation. 

C.  Fiscal  history  of  the  War  of  1812. 

1.  Inadequate  financial  preparation  for  the  War. 

a.  Dissolution    of    Bank    of    the    United    States    a    serious 
handicap. 

b.  Exportation  of  over  $7,000,000  to  pay  off  foreign  stockholders 
of  Bank  depleted  reserves. 

c.  Great  increase  in  number  of  note-issuing  state  banks  caused 
inflation  and  instability  in  the  currency. 

d.  Unpopularity    of   war    in   New    England    made    levying   of 
taxes  difficult. 

2.  Gallatin's  policies  of  war  financing. 

3.  Methods  of  paying  for  the  war. 
a.  Loans. 

ID.  Treasury  notes  and  the  inflation  of  the  currency. 
c.  Taxes;  paid  less  than  half  of  expenditures. 

4.  Financial   disorganization   connected   with  activities   of   state 
banks. 

D.  The  Second  bank  of  the  United  States,  1816-1836. 

1.  Great  need  for  the  bank  to  bring  order  out  of  chaos. 

2.  Chief  features  of  its  charter,  as  granted  by  act  of  Congress, 
April,  1816. 

3.  The  Bank  in  operation  and  its  record. 

4.  Andrew  Jackson  and  the  end  of  the  Bank;  political  considera- 

tions outweigh  economic  reasons  for  its  continuation. 

E.  The  Independent  Treasury  System  resorted  to  by  federal 

government,  1840. 

F.  State  banking  and  its  evils. 

1.  Enormous   growth    in    number    of   state    banks    during   early 
nineteenth  century. 

13 


ECONOMIC  DEVELOPMENT  OF  UNITED  STATES 

a.  Possibility  of  tremendous  profits  from  issue  of  bank  notes. 

b.  Speculation  in  western  lands  and  in  internal  improvements. 

c.  Speculative  promotion  encouraged  formation  of  banks  but 
not  proper  management. 

2.  Evils  of  state  banks. 

a.  Instability  of  the  currency  occasioned  by  over-issue  of  notes. 

b.  Failures  and  the  losses  suffered  by  the  community. 

c.  Lack  of  a  satisfactory  depository  for  government  funds. 

d.  Handicap  thus  imposed  upon  business  operations. 

3.  General  failure  of  state  regulation.     Some  states  went  so  far 
as  to  prohibit  the  existence  of  banks  within  their  territory. 

G.  Attempts  to  reform  the  state  banking  system. 

1.  Massachusetts:  the  Suffolk  Banking  System, 

a.  The  New  England  Bank  and  its  attempt  to  prevent  inflation 
of  currency  by  smaller  banks;  its  system  of  collections  in- 
stituted 1813. 

b.  The  Suffolk  Bank  (1818)  and  its  scheme  of  collections. 

c.  Massachusetts  law  of  1845  gives  legal  sanction  to  Suffolk 
System. 

d.  Success  of  the  system. 

2.  New  York:   the  gradual  development  of  constructive  banking 
policy. 

a.  Intolerable  conditions  in  early  New  York  banking:   banks 
the  spoils  of  party  politics. 

Origin  of  the  Bank  of  the  Manhattan  Company. 
Scandals  connected  with  formation  of  the  Merchants  Bank 
(1804)  and  the  Bank  of  America  (1811). 
Popular  indignation  at  the  situation. 

b.  The  Safety  Fund  System,  1829-1839. 

Purposes,  operation,  defects. 

c.  Initiation  of  the  Bond  Deposit  System,  1838. 

Importance  in  security  of  note  issues. 

Influence  on  note-issue  of  national  banks  twenty-five  years 

later. 

d.  The  notable  State  Constitution  of  1846. 

Double  liability  of  stockholders  established. 

Note  holders  made  preferred  creditors. 

Legislature  prohibited  to  suspend  specie  payments. 

No  more  "special"  charters,  and  all  future  charters  to  be 

specifically  subject  to  amendment  by  law. 

3.  Importance  of  these  state  reforms  as  forerunners  of  the  Na- 
tional Banking  System  of  1863. 

Van  Metre,  Chap.  XVI;  Thompson,  Chap.  XVI;  Lippincott,  pp. 
122-125,  217-225;  Bogart,  Chap.  XV;  White,  Chaps.  VI, 
VII,  VIII,  IX,  and  XII. 


X.  THE  WESTWARD  MOVEMENT  AND  TERRITORIAL  EXPANSION 

A.  The  territorial  expansion  of  the  United  States. 

1.  The  territory  of  the  United  States  in  1783. 

2.  The  Louisiana  Purchase,  1803,  and  its  importance. 

3.  Purchase  of  Florida  from  Spain,  1819. 

4.  Annexation  of  Texas,  1845. 

5.  The  War  with  Mexico  and  the  acquisition  of  California,  Ari- 
zona, New  Mexico,  Utah,  1848. 

6.  Adjustment  of  the  Oregon  claims:  possession  of  Idaho,  Oregon, 
Washington. 

7.  The  Gadsden  Purchase,  1853. 

14 


WESTWARD  MIGRATION 


B.  The  Settlement  of  the  West. 

1.  The  influence  of  the  pioneer  on  American  institutions. 

2.  Causes  of  westward  migration. 

a.  Dissatisfaction  of  native  American  with  economic  conditions 
in  the  East. 

b.  Competition  of  foreign  immigrants  in  East. 

— cr  Tremendous  economic  opportunities  in  the  virgin  West. 

d.  Later,  the  development  of  means  of  transportation. 

e.  Discovery  of  gold  in  California,  1849. 

3.  Government  encouragement  of  westward  migration. 

4.  Growth  of  population  of  West  in  spite  of  all  handicaps. 

5.  Vigor  and  resourcefulness  of  the  new  settlements. 

C.  Some  effects  of  the  westward  movement. 

1.  On  transportation. 

a.  Transportation  becomes  imperative  as  western  settlements 
grow. 

b.  Development  of  inland  commerce:  the  great  era  of  internal 
improvements. 

Steamboat  traffic  on  the  great  rivers  and  the  Great  Lakes. 
The  construction  of  turnpikes. 

The   canals:    the    Erie    Canal,    1825;    the    Pennsylvania, 
system,  1834. 

c.  The  stimulus  to  railroad  construction. 

2.  On  national  economic  conditions. 

a.  Development    of    triangular     relationship     between     West, 
South  and  East;  great  growth  in  Mississippi  river  traffic. 

b.  Migration  a  cause  of  labor  scarcity  in  East,  thus  raising 


c.  Great  prosperity  of  the  agricultural  West  a  source  of  pros- 
perity of  the  industrial  East. 

3.  On  population. 

a.  Distributed  population  and  avoided  suffering  which  other- 
wise  might   have  been    occasioned   by   industrialization   of 
East. 

b.  Not  only  an  effect,  but  a  cause,  of  immigration. 

4.  On   social  and  political  institutions.  * 

D.  The  West  a  source  of  strength  to  the  Union  in  the  coming 
economic  struggle  of  the  Civil  War. 

Van  Metre,  Chaps.  XIV  and  XVII;   Bogart.  Chap.  JtH;   Lippin- 
cott,  Chap.  XIV;  Thompson,  Chap.  X;  Beard,  Chap.  X. 

XI.  DOMESTIC  AND  FOREIGN  COMMERCE  BEFORE  THE  CIVIL  WAR 

A.  Great  growth  of  inland  commerce. 

1.  Largely  the  result  of  the  settlement  of  the  West  and  the  im- 
provements in  transportation. 

2.  Development  of  the  railroads. 

a.  By  1860  communication  had  been  established  between  the 
East  and  Chicago  and  St.  Louis. 

3.  Other  communications:  the  telegraph,  1832;  universal  3c.  postal 
service,  1850;  wider  circulation  of  newer  and  better  periodicals 
and  newspapers. 

B.  Development  and  growth  of  an  important  coastwise  trade. 

1.  Limitation  of  this  trade  to  American  vessels  by  laws  of  1789 
and  1817. 

2.  Importance  of  the  trade  in   economic  relationships   of  North 
and  South. 

15 


ECONOMIC  DEVELOPMENT  OF  UNITED  STATES 

C.  Growth  of  foreign  trade. 

1.  Rapid  increase  after  1845,  lasting  until  outbreak  of  Civil  War. 

2.  Chief  foreign  markets  for  American  products. 

a.  Importance  of  the  European  market. 

b.  England  as  the  best  customer. 

3.  Chief  commodities  of  export:   great  predominance  of  agricul- 
tural products. 

4.  The  import  trade. 

a.  Chief  articles  of  import:    great  predominance  of  manufac- 
tured articles  and  luxuries. 

b.  Importance  of  the  import  trade:   balance  of  imports  over 
exports  several  hundred  million  dollars. 

5.  Settlement  of  this  "unfavorable  balance  of  trade." 

a.  Freights  earned  by  American  vessels. 

b.  Loans  <from  European  investors. 

Extent  to  which  European  capital  was  invested  in  Ameri- 
can banks,  railroads,  and  other  enterprises. 
Significance  of  these  loans. 

c.  Exports  of  gold:    importance  of  discovery  of  gold  in  Cali- 
fornia. 

D.  The  American  merchant  marine. 

1.  The  ship-building  industry. 

a.  Importance  and  extent,  particularly  in  New  England. 

b.  Great  prosperity  during  the  era  of  free  trade. 

c.  Superior   quality   of  American   workmanship   in    ship   con- 
struction:  the  famous  American  clippers. 

2.  Prosperity  of  the  merchant  marine  and  the  carrying  trade: 
in  1860  American  tonnage  almost  equal  to  that  of  Great  Britain 
and  all  her  colonies. 

3.  Causes  for  the  decline  of  the  merchant  marine  after  the  Civil 
War. 

a.  The  Civil  War  and  its  disturbance  of  commerce. 

b.  The  protective  tariff. 

c.  Growth   of  industrial  enterprises  in  United  States,  cutting 
down  demand  for  foreign  manufactured  articles. 

d.  Failure  of  American  shipbuilders  to  compete  successfully 
with  European-built  steamships. 

4.  Emphasis  upon  relationship  between  tariff  policies  and  foreign 
trade.      Is    a    "protective"    tariff    destructive    to    American 
shipping? 

Van  Metre,  Chaps.  XV,  XVIII;  Bogart,  Chaps.  XIII,  XIV;  Thomp- 
son, Chap.  XIV  and  first  part  of  XV;  Lippincott,  Chap.  XI. 


A 


XII.  AGRICULTURE  AND  THE  QUESTION  OF  SLAVERY 


A.  Agricultural  progress,  1800-1860. 

1.  Exploitation  of  virgin  territories  of  the  West. 

a.  Influence  of  improved  transportation. 

b.  Growth  of  population  of  the  great  agricultural  Middle  West. 

c.  Pioneers    in    the    trackless    prairie    country    beyond    the 
Mississippi. 

2.  Extension  of  cotton  culture  to  the  Southwest. 

V       a.  Importance   of  the  central   Gulf  states   and,   later,   of   the 
states  beyond  the  Mississippi:   Arkansas,  Louisiana,  Texas, 
b.  Tremendous  influence  of  the  westward  movement  of  cotton 
culture. 

The  cotton  crop  and  the  prosperity  of  the  South. 
The  cotton  crop  and  the  textile  industries  of  the  North. 
Cotton  and  the  question  of  slavery. 

16 


AGRICULTURE  AND   SLAVERY 


3.  Introduction    and    utilization    of    machinery    for    agricultural 
purposes. 

a.  Necessity  of  machinery  in  development  of  great  tracts  of 

land  in  the  West. 
/''b.  Typical  inventions  in  farm  machinery. 

Discarding  of  antiquated  wooden  plow  and  the  adoption  of 
improved  iron  plows. 

Cyrus  H.  McCormick's  reaper,  1831;  its  subsequent  devel- 
opment. 
Mower,  thresher,  harrow,  cultivator,  and  other  implements. 

c.  Great  importance  of  these  machines. 

R61e  in  the  growth  and  prosperity  of  the  great  West. 
Great  increase  in  production  of  foodstuffs;   vital  import- 
ance of  this  fact. 

4.  Development  of  the  live  stock  industry. 

a.  Importance  of  the  live  stock  industry:   with  meat  packing 
destined  to  become  greatest  American  industry. 

b.  Chief  characteristics  of  pre-Civil  War  development. 

Improvements  in  breeding  of  animals. 
Great  increase  in  number  of  animals  raised. 

c.  Principal  types  of  live  stock:  cattle,  horses,  swine,  sheep. 

5.  Beginnings  of  more  scientific  attitude  toward  agriculture. 

a.  Organization   of  agricultural  societies. 

b.  First  Congressional  appropriation  in  aid  of  scientific  agri- 
culture, 1839;  organization  of  a  Bureau  of  Agriculture,  1862. 

c.  The  agricultural   societies   the   forerunners  of  agricultural 
schools  and  colleges. 

The  chief  crops  of  American  agriculture,  1860. 

1.  The  great  importance  of  the  cotton  crop. 

2.  Foodstuffs:  the  great  staples,  corn  and  wheat. 

3.  Other  important  crops:   hay,  tobacco,  rice,  sugar  cane. 

C.  Slavery  as  an  economic  and  social  problem. 

1.  Economic  reasons  for  the  existence  of  slavery  in  the  South  and 
its  non-existence  in  the  North. 

a.  Character  of  labor  required  in  each  section  of  country. 

b.  Extent  to  which  machinery  could  be  applied  to  work  re- 
quired. 

c.  The   organization  of   production:    the   Southern   plantation 
compared  with  the  Northern  farm  and  factory. 

2.  Advantages  of  slave  labor  to  the  Southern  planter. 

a.  Provided  absolute  and  unqualified  control  over  labor  and  its 
use. 

b.  Generally  reputed  to  be  cheap  labor. 

c.  Adaptability  of  slave  labor  to  cotton  culture. 

d.  Abundance  of  free  land  permitted  unintelligent  cultivation 
of  soil. 

3.  Disadvantages  of  slave  labor. 

a.  Reluctance  of  forced  labor;   consequent  unusual  amount  of 
supervision. 

b.  Clumsiness,  ignorance,  wastefulness,  lack  of  versatility  of 
slaves. 

c.  Wastefulness  of  the  plantation  system. 

d.  Slavery  a  form  of  moral  degradation? 

4.  Question  of  the  alleged  necessity  of  slave  labor. 

D.  Slavery  a  political  question. 

Beard,  Chap.  XIV;   Bogart,  Chaps.  IX,  XVII,  XVIII;   Thompson, 
Chaps.  XIII  and  XVII. 

17 


ECONOMIC  DEVEJLOPMENT  OF  UNITED  STATES 

XIII.  SURVEY  OF  SOCIAL  AND  ECONOMIC  CONDITIONS  AT  OUT- 
BREAK OF  CIVIL  WAR 

A.  Population  of  the  nation  in  1860. 

1.  Total  for  the  nation  31,000,000,   representing  an   increase  of 
100%  in  a  period  of  twenty-five  years. 

2.  Growth  of  cities  in  the  industrialized  North  and  East. 

3.  Causes  of  increasing  population. 

a.  The  native  birth-rate. 

b.  Immigration. 

c.  Prosperity  and  the  food  supply. 

B.  Immigration  and  the  development  of  the  North  and  West. 

1.  Causes  of  European  immigration  to  the  United  States. 

a.  Demand  for  labor  in  America,  both  in  the  agricultural  West 
and  the  industrial  East. 

b.  Disturbed  conditions  in  Europe,  notably  the  Irish  famine  of 
1846  and  the  revolutions  of  1848. 

2.  Distribution  of  immigration. 

a.  Slave  labor  in  the  South  a  cause  for  keeping  immigrants 
away. 

b.  Lure  of  the  older  agricultural  states  of  the  West:   German 
settlements  in  Wisconsin  and  Minnesota. 

c.  Immigrant  labor  in  the  factories  of  the  East. 

d.  Absence  of  immigrants  among  the  pioneers. 

3.  Character  of  immigration  before  Civil  War. 

a.  Ireland  and  Germany  supplied  greatest  number,  1820-1860. 

b.  England,  France,  Switzerland,  Netherlands  followed. 

c.  Practically  none  from  southern  and  southeastern  Europe. 

4.  Social  problems  of  immigration. 

a.  The  Irish  problem:   congestion  in  the  cities;   clannishness; 
popular  fear  of  Catholicism ;  political  activities  in  New  York. 

b.  American   reaction   to   immigrants:    The   Native  American 
Party;   the  Order  of  the  Star  Spangled  Banner;   the  Know 
Nothing  Movement. 

5.  Importance  of  this  older  immigration  in  economic  development 
of  nation. 

C.  The  free  laborer  of  the  North. 

1.  Factors  making  for  altered  position  of  the  free  laborer  in  the 
North. 

a.  Extension  of  the  factory  system. 

b.  Transformation   from   the   "handicraft"   to   the   "domestic" 
system  in  certain  other  industries. 

c.  Wider   demands   for   manufactured   articles   because   of   in- 
creased population  and  improved  transportation  facilities. 

2.  Some  phases  of  this  altered  position. 

a.  Appearance   of   new    forces    of    competition:    prison    labor, 
sweat-shops,   woman  and   child   labor,   variations  in   living 
costs  between  communities. 

b.  The  employer-employee  relationship. 

3.  Early  demands  of  labor. 

a.  Shorter  work  day:  "six  to  six." 

b.  "Hard  money." 

c.  Prohibition   of  speculation   in   public  lands;    sale   of  these 
lands  to  citizens  on  reasonable  terms. 

4.  Labor  organization  and  trade  unionism  practically  non-existent. 

5.  The  Socialism  of  the  day  not  a  working-class  movement. 

a.  Owenism,  inspired  by  visit  to  America  of  Robert  Owen,  1825. 

b.  Other  Utopians:   Fourier,  Brisbane,  and  others. 

18 


THE  CIVIL  WAR 


D.  Comparative  economic  resources  of  North  and  South  for  the 
coming  war. 

1.  Population  ratio  of  19-12  in  favor  of  North. 

2.  Industrial  conditions. 

a.  Overwhelming  superiority  of   the  North   in   production   of 
manufactured  articles. 

b.  South  poorly  equipped  with  the  "sinews  of  war." 

3.  Agriculture. 

a.  North  supplied  with  abundance  of  food-stuffs. 

b.  South  had  specialized  in  "money  crops"  such  as  cotton  and 
tobacco. 

4.  Transportation. 

a.  Northern  railway  mileage  almost  2^  times  that  of  South. 

b.  Better  roads  in  North. 

c.  Rivers  about  equally  divided. 

d.  Coastwise  and  ocean  traffic  in  hands  of  North. 

5.  Importance  of  economic  resources  in  final  outcome  of  the  Civil 

War. 

West,  Chap.  LVI;    Thompson,  Chap.  XVIII;   Bogart,  Chap.  XVI. 


XIV.  ECONOMIC  ADJUSTMENTS  DURING  THE  CIVIL  WAR 

A.  Financial  chaos  at  outbreak  of  the  war. 

1.  Financial  panic  following  the  election  of  Lincoln. 

2.  Inadequacy  of  the  system  of  taxation. 

3.  Lack   of  a  national    bank  and   the   disorganization    of   state 
banking. 

4.  Inability  of  the  government  to  borrow  money  even  at  exorbi- 
tant interest. 

B.  Financial  reform  to  meet  war-time  expenditures. 

1.  Initial  attempts  of  Congress   to  meet  expenses  of  war  from 
loans. 

2.  Gradual  increasing  of  taxation:  the  new  tariff;   stamp  duties; 
income  tax;  "Taxation  from  the  cradle  to  the  grave." 

3.  Resort  to  legal-tender  notes:    the   "Greenbacks;"    the    "Shin- 
plasters." 

4.  Final  adoption  of  a  national  banking  system. 

C.  The  establishment  of  the  National  Banking  System. 

1.  The  need  for  banks  under  federal  control. 

a.  Inflation,    redundancy,    lack    of    uniformity    of    note    issue 
under  a  system  of  state  banking. 

b.  Unequal  distribution  of  state  banking  facilities. 

c.  State  bank  issues  incompatible  with  national  interest  at  a 
time  when  country  was  fighting  war  of  self-preservation. 

d.  Very  serious  need  of  aid  for  the  national  credit. 

The    Acts    of    Congress,    establishing    the    National    Banking 
System. 

a.  The  Act  of  February  25,  1863,  establishing  national  banks 
authorized  to  issue  notes  on  the  bond  deposit  system. 

b.  The  amending  Act  of  June  3,  1864,  incorporating  improve- 
ments suggested  by  Hugh  McCulloch,  first  Comptroller  of 
the  Currency. 

c.  The  Act  of  March  3,  1865,  placing  10%  tax  on  circulation  of 
state  banks. 

19 


ECONOMIC  DEVELOPMENT  OF  UNITED  STATES 

3.  Chief  features  of  the  National  Banking  System. 

a.  Organization  of  member  banks. 

b.  Liabilities  of  directors  and  stockholders. 

c.  Supervision  and  examination  by  federal  government. 

d.  Limitations  on  banking  operations. 

e.  Privilege  and  conditions  of  bank  note  circulation. 

f.  Reserves. 

4.  The  System  in  operation  and  its  services  during  the  War. 

5.  Antagonism  to  the  national  banks  during  the  War  and  after. 

D.  Industry  during  the  War. 

1.  War-time   demand   for  manufactured  articles  stimulates   pro- 
duction. 

2.  A  concurrent  shortage  of  labor  brought  about  sweeping  changes 
of  method  (see  below,  Section  XV). 

3.  Protective  aspects  of  war-time  tariff  acts. 

B.  Agriculture  and  its  importance. 

1.  Agriculture,  as  well  as  industry,  faced  by  an  increasing  demand 
and  a  shortage  .of  labor. 

2.  Extension  of  the  use  of  machinery:   "The  issue  of  the  Civil 
War  was  decided  by  the  invention  of  the  reaper."    Maintenance 
of  the  food-'supply. 

3.  The  Homestead  Act,  1862,  and  its  assurance  of  further  develop- 
ment of  national  agricultural  resources. 

F.  Transportation  during  the  war. 

1.  Increased  mileage  of  the  North  offset  by  destruction  of  South- 
ern roads  by  contending  armies. 

2.  National  encouragement  to  railroad  construction :  land  grants 
to  trans-continental   roads;    beginning   of   the  Union    Pacific, 
1862. 

3.  Decline  in  the  merchant  marine. 

Van  Metre,  Chap.  XIX;    Thompson,  Chap.  XIX;   Dewey,  Chap 
XIII;  White,  Chap.  XIV. 


/. 


XV.  ECONOMIC  EFFECTS  OF  THE  CIVIL  WAR 

A.  The  Second  Industrial  Revolution  in  America. 

1.  Far-reaching  effects  of  this  Second  Industrial  Revolution. 

a.  Not  only  increased  production  but  radically  altered  methods 
of  production. 

b.  Changed  the  forms  of  business  organization  and  investment 
of  capital. 

c.  Gave  rise  to  pressing  social  problems. 

d.  Destroyed  the  predominance  of  agriculture  over  industry. 

2.  War-time  conditions  as  a  stimulus  to  manufacturing. 

a.  War  demand  for  food,  clothing,  munitions. 

b.  Effect  of  inflation  and  high  prices  upon  production. 

c.  High  protective  tariffs  and  practical  elimination  of  foreign 
competition. 

d.  After-war   reconstruction   in    South   and   its   demand   upon 
Northern  industry. 

3.  Other  factors  in  industrial  expansion. 

a.  Opening  up  of  the  West:  influence  of  the  Homestead  Act. 

Increased  purchasing  power  of  domestic  market. 
Improvement    of    transportation,  facilities    for    domestic 
trade. 

b.  Exploitation   of   natural   resources  and   assured   supply   of 
cheap  raw  materials. 

20 


THE  INDUSTRIAL  REVOLUTION 


4.  Extension  of  machine  production  and  the  factory  system. 

a.  War's   inroads   on  the   labor   supply   and   the    necessity  of 
labor-saving  machinery. 

b.  Standardization   (as  in  sizes  of  uniforms  and  equipment) 
and  large-scale  production. 

5.  The  Industrial  Revolution  in  certain  representative  American 
industries. 

a.  Clothing. 

b.  Boots  and  shoes. 

c.  Textiles. 

d.  Iron  and  steel. 

B.  The  accompanying  expansion  in  agricultural  production. 

1.  Recruiting  for  the  armies  and  its  inroads  on  the  agricultural 
labor  supply;  the  incentive  for  extension  of  use  of  machinery 
in  farming. 

2.  Increasing  use  of  improved  farm  implements  and  agricultural 
machinery;  new  inventions. 

3.  Growth  of  area  devoted  to  farming  and  tremendous  increase 
in  agricultural  production. 

4.  Agriculture  as  a  business:   growth  of  the  international  grain 
trade. 

C.  Extension  of  the  Industrial  Revolution  in  America. 

1.  Development  of  a  few  representative  American  industries. 

a.  Iron  and  steel:   "The  steel  age." 

Abundance  of  ore  and  fuel. 
Improvements  in  methods  of  manufacture. 
The  demand  for  steel  products:    rails,  machinery,  tools, 
sky-scrapers,    dreadnaughts,    bridges,   trolley   cars,    auto- 
mobiles. 

Growth  of  importance  of  steel  industry  to  American  eco- 
nomic life;  place  of  this  industry  in  world's  markets. 

b.  Clothing,  footwear,  textiles. 

c.  Slaughtering  and  meat  packing. 

d.  Lumber  and  timber,  milling,  liquor,  etc. 

e.  Petroleum  and  its  growing  importance. 

2.  The    continuance    of    revolutionary    changes    in    methods    of 
manufacture. 

a.  The  system  of  interchangeable  mechanism  and  standardized 
parts. 

b.  Wider  application  of  power  machinery;   great  r61e  of  elec- 
tricity. 

c.  The  Ford  Motor  Company  an  illustration  of  the  methods  of 
American  industry. 

D.  Economic  reconstruction  of  the  South. 

1.  Break-up  of  the  plantation  system  of  agricultural  production. 

a.  Disadvantages  of  the  plantation  system  and  benefits  gained 
by  its  abandonment. 

b.  Diversification  of  crops  and  increased  use  of  machinery. 

c.  Continued  importance  of  cotton  production. 

2.  Industrial  development  in  the  South. 

a.  Mining  of  coal  and  iron. 

b.  The  great  lumber  and  timber  industry. 

c.  The  growing  importance  of  petroleum. 

d.  Iron  and  steel  manufactures:  Birmingham,  Ala.,  a  Southern 
Pittsburgh. 

e.  Cotton  manufactures. 

Encouragement  by  press,  government,  railroads,  Southern 

capital. 

Proximity  to  raw  materials,  cheap  power,  low  labor  costs 

as  natural  advantages. 

21 


_  ECONOMIC  DEVELOPMENT  OF  UNITED  STATES  _ 

f.  Improved  transportation   with   consolidation  and   extension 

of  railroads  in  great  trunk  systems. 
3.  Present  place  of  the  South  in  economic  life  of  the  nation. 

E.  Social  and  economic  effects  of  the  Industrial  Revolution  in 
America. 

1.  Problems  of  population. 

a.  Great  growth  of  population  after  the  Civil  War. 

b.  Redistribution  of  population:   growth  of  the  cities. 

Increase  in  number  and  size. 

Emergence  of  great  industrial  cities  developing  around  a 

single  industry:  Gary,  Dearborn,  Bethlehem,  e.  g. 

Increasing  percentage  of  urban  as  compared  with  rural 

population. 

c.  The   demand   for   cheap   labor   and   the    new   immigration, 
European  and  Oriental. 

2.  Readjustments  of  social  relationships. 

a.  Decline  of  the  mercantile  and  slave-holding  aristocracies. 

b.  Emergence  of  powerful  industrial  capitalists:    "captains  of 
industry,"    "industrial    barons,"    etc.      Great   fortunes    and 
their  political,  social,  economic  importance. 

c.  Great  growth  in  numbers  of  urban  wage-earners. 

The  factory  system  and  emphasis  upon  employer-employee 

relationship. 

Classification  of  persons  engaged  in  manufacturing. 

d.  Clash  of  agrarian  and  industrial  interests. 

3.  Emergence  of  the  labor  problem  in  industry  and  politics. 

a.  Labor  organizations;   their  growth  in  numbers  and  power. 

b.  Political    parties    representing    interests    of    wage-earners: 
Socialism  and  its  rise  in  the  United  States. 

c.  Lowering  of  labor  standards. 
Women  and  children  in  industry. 

The  competition  of  unskilled  immigrants  with  low  standards. 

4.  Changes  in  business  organization. 

a.  Greater  need  for  employment  of  large  amounts  of  capital  in 
industrial  enterprises:    the  corporate  form  of  organization. 

b.  Tendencies  toward  concentration  of  control   of  capital:   in- 
dustrial combinations  and  trusts. 


F.  The  United  States  an  Industrial  World  Power. 


Van  Metre,  Chap.  XX;   Thompson,  Chaps.  XX,  XXI;  Lippincott, 
Chap.  XII;   Bogart,  Chap.  XIX. 

XVI.  THE  DEVELOPMENT  OF  THE  GREAT  WEST 


A.  The  railroad,  the  forerunner  of  civilization  in  the  Far  West. 

1.  Great  increase  in  mileage  west  of  the  Mississippi  after  1860. 

2.  Transcontinental  lines. 

a.  Government    assistance    through    bond    issues     and    land 

grants, 
•b.  The  Union  Pacific  and  Central  Pacific,  1862-1869. 

c.  The  Northern  Pacific,  from  Lake  Superior  to  Puget  Sound 
(1883). 

d.  The     Southern    Pacific,    Santa    Fe",    and    Great    Northern 
systems. 

3.  James  J.  Hill,  financier  and  railroad  pioneer,  and  his  methods. 

a.  Encouragement  of   emigration  and   of  agriculture  and   in- 
dustry. 

b.  Suggestion  of  possibilities  of  commerce  with  Far  East. 

4.  Estimate  of  the  great  role  of  the  railroads  in  the  economic 
development  of  the  West. 

22 


THE  GREAT  WEST 


B.  Incentives  to  westward  expansion. 

1.  Agricultural  possibilities  of  the  West  made  still  more  attrac- 
tive by  abundance  of  cheap  and  free  lands. 

2.  The  great  mineral  wealth  of  the  country. 

3.  Timber  resources  of  the  Northwest. 

4.  Oil  and  the  lure  of  the  Southwest. 

C.  The  development  of  agriculture  in  the  West. 

1.  Chief  characteristics  of  Western  farming. 

2.  Contribution    of   the   West   to   the   great   international   grain 
trade. 

Importance  of  this  to  the  whole  nation;   a  factor  in  estab- 
lishing a  "favorable  balance  of  trade." 

3.  Scientific  agriculture  in  the  Western   states   and   territories. 

4.  Irrigation  and  the  reclamation  of  desert  country. 

5.  Fruit-growing  on  the  great  Pacific  Coast. 

6.  Importance  of  the  agricultural  West  to  the  economic  prosperity 
of  the  nation. 

D.  Western  industries  and  their  development. 

1.  Mining:    gold,  silver,  iron,  and  copper  a  great  source  of  na- 
tional wealth. 

2.  The  great  timber  industry. 

3.  Cattle    raising   and    meat    packing    take    front    rank    among 
American  industries. 

4.  Fisheries,  fruit  canning,  wine. 

5.  Iron  and  steel  manufactures. 

6.  Oil  and  its  growing  importance. 

E.  Commercial  development  of  the  West:  beginnings  and  ex- 

pansion of  trade  with  the  Far  East. 

1.  The  trans-Pacific  trade. 

2.  The  stimulation  to  Pacific  Coast  shipbuilding. 

3.  Development  of  harbors  and  commercial  cities. 

F.  Importance  of  the  development  of  the  West  in  economic  prog- 

ress of  the  nation. 

1.  Reaction  upon  Eastern  agriculture. 

2.  Reaction  upon  Eastern  industry. 

a.  Effect  on  labor  in  the  East. 

b.  Expansion  of  the  American  market. 

c.  The  West  a  source  of  raw  materials  for  Eastern  factories. 

3.  Western  development  and  the  new  immigration. 
Lippincott,  Chap.  XV;  Beard,  Chap.  XVIII. 

XVII.  THE  ERA  OF  BIG  BUSINESS 

A.  Growth  of  industrial  combinations  since  1880. 

1.  Conditions  that  have  made  industrial  combinations  a  practical 
possibility. 

a.  The  extension  of  the  home  market  and  the  improvement  of 
internal  communications. 

b.  Changes  in  methods  of  production  and  the  success  of  large 
scale  production. 

c.  The  improvement  of  business  methods:  development  of  ade- 
quate accounting  systems;  the  typewriter;  extended  use  of 
telegraph  and  telephone. 

23 


ECONOMIC  DEVELOPMENT  OF  UNITED  STATES 

d.  Development  and   utilization  of  corporate   form  of  organi- 
zation. 
2.  Statistics  illustrating  the  growth  of  industrial  combinations. 

B.  The  main  reasons  for  industrial  combinations. 

1.  Desire  for  monopoly  profits. 

2.  Elimination  of  ruinous  and  unfair  competition. 

3.  Economies  of  production,  distribution,  management. 

a.  Economical  utilization  of  plant  and  machinery;   non-dupli- 
cation of  facilities. 

b.  More  advantageous  division  of  labor. 

c.  Pooling  of  patents  and  formulas. 

d.  Economical  purchasing  of  raw  materials  and  other  neces- 
sities. 

e.  Economical  marketing  of  the  finished  product. 

Savings  in  advertising  and  sales  forces,  e.g. 
Saving  of  cross-freights. 

f.  Utilization  of  by-products:  example  of  the  packing  industry. 

g.  Better  possibility  of  skilled  management  at  proportionally 
less  expense. 

h.  Improved  credit  and  better  command  of  capital. 

4.  Greater  power  of  combinations  to  cope  successfully  with  grow- 
ing bargaining  power  of  labor  unions. 

5.  The  financiers'  profits  of  promotion. 

C.  Chief  forms  of  industrial  combinations  in  the  United  States. 

1.  Price  agreements. 

2.  Pools. 

3.  Trusts. 

4.  Holding  companies. 

5.  Consolidations:  mergers  and  amalgamations. 

D.  Large  scale  production,  as  distinguished  from  combinations 

tending  toward  monopoly. 

1.  The  difference  between  a  large  plant  and  a  combination  mon- 
opolizing output. 

2.  Prevalence    of    large-scale    production    in    modern    industrial 
America. 

a.  Farming  not  well  adapted  to  large  producing  units. 

b.  Mining  an  industry  which  tends  to  be  controlled  by  combi- 
nations. 

c.  Large    scale    production    usually    advantageous    in    manu- 
facturing. 

d.  Transportation  requires   elimination   of  certain   amount  of 
competition  and  can  be  conducted  satisfactorily  only  with 
large  investments  of  capital;  combination  has  been  regional. 

3.  Large-scale  production  in  general  favorable  to  combination. 

E.  Economic  problems  resulting  from  large  scale  production 

and  industrial  combinations. 

1.  Regulation  of  the  railroads. 

2.  Regulation  of  trusts  and  other  industrial  combinations. 

3.  Adjustment  of  the  tariff. 

4.  Conservation  of  natural  resources. 

5.  Concentration  of  control  of  capital.^ 

6.  Labor  organization  and  the  demand  for  concentrated  control 
of  labor. 

7.  The  export  trade  and  American  imperialism. 

Van  Metre,  Chaps.  XXI,  XXII  (last  part),  XXIV;  Bogart,  Chap. 
XXVI,  Thompson,  Chap.  XXII;  Lippincott,  Chap.  XXI,  first 
part. 

24 


ERA  OF  BIG  BUSINESS 


XVIII.  GOVERNMENT  REGULATION  OF  INDUSTRIAL  COMBINATIONS 

A.  The     necessity     of     a     public    policy     toward     industrial 

combinations. 

1.  Laissez-faire  for  obvious  reasons  would  not  be  a  solution.   Has 
never  actually  been  tried  in  United  States,  for  common  law 
prohibited  combinations  in  restraint  of  trade. 

2.  The  choice  between  prohibition  and  regulation  of  combinations. 

B.  Attempts  to  prohibit  combinations  in  restraint  of  trade. 

1.  Prohibition  of  pools  by  the  Interstate  Commerce  Act,  1887. 

2.  The  Sherman  Anti-Trust  Act,  1890. 

a.  Every  contract,  combination,  or  conspiracy  in  restraint  of 
trade  declared  illegal;  persons  or  corporations  monopolizing 
or  attempting  to  monopolize  interstate  or  foreign  commerce 
declared  guiltf  misdemeanor,  punishable  by  fine  or  im- 


b.  Other  p»  f  the  Act. 

c.  Laxity  oiH     Mfcaent  during  first  twelve  years  law  was 
on  books. 

d.  Enforcement  under  Roosevelt  and  Taft. 

3.  Creation  of  Bureau  of  Corporations,  1903,  to  investigate  activi- 
ties of  corporations  and  industrial  combinations. 

C.  Attempts  to  prevent  combinations  tending  toward  monopoly. 

1.  The  Trade  Commission  Act,  September  1914. 

a.  Creation  of  a  Federal  Trade  Commission. 

b.  Duties  and  powers  of  the  Commission. 

c.  Use  of  injunction  as  a  weapon  of  Commission. 

2.  Estimate  of  the  importance  of  prevention  as  compared  with 
prohibition. 

D.  Attempts  to  regulate  competition. 

1.  Important  provisions  of  the  Clayton  Act,  October  1914. 

a.  Certain  specific  methods  of  competition  declared  to  be  un- 
fair and  unlawful:  price  discrimination,  exclusive  selling  or 
leasing  contracts,  interlocking  directorates    (under  certain 
conditions),  etc. 

b.  Labor  provisions  of  the  Act. 

Labor  declared  to  be  not  a  commodity  or  an  article  of 

commerce. 

Labor  organizations  specifically  declared  to  be  not  combi- 

nations in  restraint  of  trade. 

The  right  to  strike  affirmed  and  peaceful  picketing  de- 

clared lawful. 

2.  Significance  of  the  Clayton  Act:  designed  to  preserve  the  bene- 
fits of  competition  without  its  flagrant  abuses  and  to  permit 
of  economies  of  large  scale  production  and  reasonable  combi- 
nation. 

Van  Metre,   Chap.  XXV;   Lippincott,  pp.  485-489;    Bogart,  Chap. 
XXVII;  Hagee,  Chaps.  XIII-XV. 


XIX.  THE  RAILROAD  PROBLEM 

A.  Magnitude  of  the  railroad  problem  in  the  United  States. 

1.  American  compared  with  European  railroad  mileage. 

2.  Peculiar  circumstances  connected  with  construction  of  Ameri- 
can railroads. 

25 


ECONOMIC  DEVELOPMENT  OF  UNITED  STATES 

B.  Distinctive  characteristics  of  the  railway  business  and  the 

dangers  of  unregulated  competition. 

1.  The  railroad  as  a  quasi-public  enterprise. 

2.  Juggling  of  railway   finances   and   activities   of   railroads   in 
politics. 

3.  Evils  growing  out  of  excessive  competition  between  roads. 

a.  Such  competition  certain  to  lead  either  to  combination  or 
to  bankruptcy  of  competitors. 

b.  Granting   of   discriminatory   rates   a   menace  to   the    inde- 
pendent producer:  role  of  discriminatory  rates  in  success  of 
the  Standard  Oil  as  a  trust. 

c.  Methods  of  granting  discriminatory  rates. 

C.  Attempts   of  the   railroads   themselves  to   restrict   ruinous 

competition. 

1.  Pools. 

2.  Traffic  agreements  and  associations  for  regulation  of  rates. 

3.  Consolidations. 

4.  "Community  of  interest"  the  dominant  method  since  1904. 

5.  Attitude  of  the  law  toward  these  attempts  of  the  railroads  to 
restrict  competition. 

D.  Failure  of  state  regulation  of  the  railroads. 

E.  Federal  regulation  of  the  railroads. 

1.  Interstate  Commerce  Act,  1887. 

a.  Establishment  of  the  Interstate  Commerce  Commission. 

b.  Regulation  of  rates. 

c.  Practices  declared  illegal  under  the  Act. 

d.  Weaknesses  of  the  Act. 

2.  Amendments  to  the  Interstate  Commerce  Act;  the  Elkins  Act, 
1903,  the  Hepburn  Law,  1906,  the  Mann-Elkins  Act,  1910. 

a.  Increased  size  and  powers  of  the  Commission. 

b.  Provisions  of  these  Acts  extended  to  include  sleeping  car 
companies,   telegraph   and   cable   and  telephone  companies, 
express  companies,  terminals,  and  other  common  carriers. 

3.  Government  regulation  of  laboring  conditions  on  the  railroads : 
the  Adamson  Law  of  1916. 

a.  The  railroad  brotherhoods  and  the  threat  of  a  nation-wide 
strike. 

b.  The  stake  of  the  public  in  the  controversy. 

c.  The  decision  of  President  Wilson  and  Congress  on  the  ques- 
tion of  the  eight-hour  day  and  other  disputed  questions. 

F.  Government  operation  of  the  railroads. 

1.  The  national  emergency  of  1917  and  the  need  for  a  co-operating 
and  co-ordinated  railroad  system. 

2.  The  Railroad  Control  Act,  March  1918. 

a.  Private  ownership  continued,  but  actual  operation  of  the 
roads  to  be  controlled  by  the  Government. 

b.  Private  owners  guaranteed  a  fixed  compensation  during  the 
period  of  Government  operation. 

c.  The  Act  confirmed  Presidential  proclamation   of  December 
26,   1917,  by  which  roads  had  been  taken   over  as   a   war 
measure. 

3.  The  railroads  under  the  United   States  Railroad  Administra- 
tion: W.  G.  McAdoo  as  Director  General. 

26 


THE  RAILROAD  PROBLEM 


•G.  The  end  of  Government  operation ;  reversion  of  the  roads  to 
their  private  owners  under  the  Transportation  Act  of  1920. 

1.  Termination  of  Federal  control,  March  1,  1920. 

2.  Contemplated  adjustment  of  rates  to  permit  of  fair  return  on 
property  value. 

3.  Division  and  disposition  of  excess  earnings. 

4.  Temporary  "revolving  fund"  of  $300,000,000. 

5.  Government  regulation  and  control   of  the   issue  of   railroad 
securities. 

6.  Consolidations  to  be  permitted  under  guidance   of  Interstate 
Commerce  Commission. 

7.  Enlargement  of  personnel  and  powers  of  Interstate  Commerce 
Commission. 

8.  Labor  provisions  of  the  Act. 

a.  The  Labor  Adjustment  Boards. 

b.  The  Railroad  Labor  Board. 

H.  Difficulties  of  the  railroads  under  private  operation. 

1.  Physical  deterioration  of  the  roads  and  their  equipment  dur- 
ing the  War. 

2.  Inadequate  operating  revenue:   the  increased  rates  of  August 
1920. 

3.  Survival  of  war-time  extravagance  and  inefficiency. 

4.  Problems  of  "readjustment"  of  wages. 

Bogart,  Chap.  XXVI;    Thompson,  pp.  440-448;   Lippincott,  Chap. 
XXIII;  Magee,  Chap.  XII. 


XX.  PROBLEMS  OF  PUBLIC  FINANCE 

A.  Nature  of  the  financial  problems  raised  by  the  Civil  War. 

1.  Funding  of  the  public  debt. 

a.  Heterogeneous  character   of  the  obligations  of  the  Govern- 
ment outstanding  in  1865. 

b.  Excessive  interest  rates   and   the   importance  of   reducing 
them. 

2.  Readjustment  of  taxation. 

3.  Deflation  of  the  currency  and  restoration  of  specie  payments. 

B.  Monetary  and  currency  legislation  since  the  Civil  War. 

1.  The  question  of  deflation  and  resumption. 

a.  Wide   differences   of  opinion  as  to   the  desirability   of   de- 
flation. 

b.  These   differences   complicated   by   differences   over   proper 
methods. 

c.  Temporary  victory  of  the  inflationists. 

2.  The  Specie  Resumption  Act,  January  1875.     Disappearance  of 
premium  on  gold  before  date  for  resumption,  1879.     No  con- 
traction, however. 

3.  Beginnings  of  the  silver  coinage  agitation. 

a.  "The  Crime  of  1873." 

b.  Economic  interests  behind  free  silver  agitation. 

Inflationists:  the  "soft  money"  party.  Precedents  estab- 
lished by  the  Greenback  Party.  Why  the  farmers  of  the 
West  were  behind  silver  coinage. 

The  silver  mining  interests.  Fall  of  the  price  of  silver 
because  of  increased  production  of  American  mines 
and  because  of  its  demonetization  by  certain  European 
nations. 

27 


ECONOMIC  DEVELOPMENT  OF  UNITED  STATES 

c.  Bland-Allison  Silver  Purchase  Act,  1878. 

d.  Sherman  Silver  Purchase  Act,  1890. 

e.  Disastrous  results  of  silver  purchase  to  Federal  Treasury. 
Situation  complicated  by  Panic  of  1893.     Repeal  of  silver 
purchases,  1893. 

4.  The  campaign  of  1896  and  the  decision  against  free  silver  and 
bimetallism. 

5.  The  Gold  Standard  Act,  1900. 

6.  The  Aldrich-Vreeland  Act,  1908,  for  an  emergency  currency. 
A  result  of  experience  in  Panic  of  1907. 

7.  Pittman  Silver  Purchase  Act  of  1918. 

a.  A  means  of  adjusting  currency  to  war  conditions. 

b.  A  means  of  adjusting  our  unfavorable  trade  balance  with 
Far  East. 

C.  The  national  debt,  its  funding  and  reduction. 

1.  Conversion    of    short-term    obligations    into   long-term    bonds, 
1866. 

2.  Question  of  redeeming  bonds  in  gold  or  currency.     One  cur- 
rency for  the  bondholder  and  the  ploughholder? 

3.  Refunding  Act  of  1870:   reduction  of  rate  of  interest  on  out- 
standing bonds. 

4.  The  sinking  fund  and  the  principle  of  annual  purchases  of 
bonds  by  the  Treasury. 

5.  Reduction  of  the  public  debt  temporarily  interrupted  by  the 
Spanish  War. 

D.  Readjustment  of  taxation. 

1.  The  tariff. 

a.  The  tariff  primarily  a  question  of  "protection"? 

Theoretical  distinction  between  tariff  for  revenue  and  a 
protective  tariff. 

Enormous  revenues  produced  by  American  tariffs  before 
outbreak  of  the  Great  War. 

b.  Tariffs   revised   with    little   regard    for    revenue   needs   of 
nation. 

2.  Revision  of  the  internal  revenues. 

a.  Report  of   the   Tax   Revision   Commission,    1865. 

b.  Elimination   of   "vexatious"    taxes,    "taxes   on    knowledge," 
taxes  on  raw  materials,  etc.;   gradual  reduction  and  repeal 
of  others,  except  those  on  liquors  and  tobacco. 

c.  Repeal  of  the  income  tax,  1872.      (Re-introduced  1894,  but 
declared  unconstitutional  in  1895). 

3.  "Surplus  financiering,"  1880-1893. 

a.  Causes  of  the  surplus. 

Great  prosperity  of  the  country. 

Reduction  of  the  national  debt. 

Failure  to  reduce  the  tariff  or  to  consider  it  a  revenue 

measure. 

b.  The  danger  of  the  surplus:  governmental  extravagance  and 
corruption. 

Absurd    demands   for    public    improvements:    the    "pork 
barrel." 

The  Grand  Army  of  the  Republic  and   its  demands  for 
pensions. 

c.  Features  of  "surplus  financiering." 

Deposits  of  public  funds  in  national  banks;  evils  of  this. 
Reduction  of  revenues. 

Further  reduction  in  internal  revenues. 

Stubborn  refusal  to  lower  the  tariff. 
Increased  expenditures. 

28 


PUBLIC  FINANCE  AND  THE  TARIFF 


"Raids  on  the   Treasury"  and  the  fabulous   sums  ex- 
pended on  pensions. 
Rivers  and  harbors  bills. 
Beginnings  of  naval  construction. 

d.  Exhaustion  of  the  surplus  and  the  serious  situation  of  the 
Treasury  in  1893. 

4.  The  financing  of  the  Spanish-American  War. 

5.  Financing  the  Panama  Canal. 

6.  Additional  taxation  in  the  early  twentieth  century. 

a.  The  corporation  tax,  1909. 

b.  An    income   tax   authorized   by   constitutional    amendment, 
1913,  and  a  graduated  form  of  this  tax  imposed  by  Under- 
wood Tariff  Act  of  1913. 

7.  Problems   of    finance   and   taxation,    1914-1917:    effect    of   the 
European  war  on  income  from  the  tariff. 

Van  Metre,  Chap.  XXIII;  Dewey,  Chaps.  XIV,  XV,  XVII,  XVIII; 
Bogart,  Chap.  XXII;  Lippincott,  pp.  557-573;  Thompson,  pp. 
273-276,  Chap  XXV;  Magee,  Chap.  XVIII. 


XXI.  THE  TARIFF  PROBLEM 

A.  The  Civil  War  and  the  revival  of  protectionism. 

1.  The   Morrill    Act,    1861,    a   temporary    expedient    to    increase 
revenue. 

2.  Tariff  increased  materially  in  1862  and  1864;  latter  act  raised 
average  rate  to  47%,  highest  point  reached  up  to  this  time. 

3.  Protection  justified  as  a  means  of  offsetting  heavy  taxation 
placed  upon  domestic  manufactures. 

4.  Northern  manufacturers  took  advantage  of  the  situation. 

a.  Of  the  patriotic  desire  to  raise  money  for  equipping  and 
feeding  the  troops. 

b.  Of  the  absence  of  the  traditional  Southern  and  Democratic 
opposition. 

B.  The  tariff  during  economic  reconstruction. 

1.  Return  to   peace  did  not  bring  reduction   of  import  duties; 
protection  apparently  intrenched. 

2.  Some  few  readjustments  made  to  reduce  revenue. 

C.  The  tariff  as  a  political  issue,  1884-1900. 

1.  The  campaign  of  1884. 

a.  Republicans  frankly  for  protection  for  American  industries 
and  for  the  "rights  and  wages  of  the  laborer," — forerunner 
of  the  argument  for  the  "full  dinner  pail." 

b.  Cleveland   elected   on   a   platform   demanding  reduction   of 
duties  on  manufactured  articles  and  admission  of  raw  ma- 
terials free  of  duty. 

2.  Inability  of  the  Democrats  to  revise  tariff  during  Cleveland's 
first  term. 

3.  Victory  of  the  Republicans  in  1888  results  in  McKinley  Tariff 
Act,  1890. 

4.  Wilson-Gorman  Tariff  Act,  1894. 

a.  Although  passed  during  Cleveland's  second  term,  it  was 
protectionist  in  nature,  Democrats  refusing  to  sanction  ma- 
terial reductions.  Became  a  law  without  Cleveland's 
signature. 

5.  The  Republican  victory  of  1896  and  the  protectionist  Dingley 
Tariff  of  1897,  the  highest  in  our  history. 

29 


ECONOMIC  DEVELOPMENT  OF  UNITED  STATES 

D.  The  Payne-Aldrich  Tariff  Act,  1909. 

1.  A  readjustment,  not  a  general  reduction,  of  duties. 

2.  Tariff  Board  created,  but  abandoned  after  three  years  of  work. 

E.  Tariff  legislation  during  the  Wilson  administration. 

1.  Notable   reductions    in    some   duties   provided   by   Underwood 
Tariff,  1913. 

2.  Creation  of  a  Tariff  Commission,  by  Act  of  September  8,  1916, 
to  make  a  scientific  study   of   the  tariff,   its  administration, 
and  its  effects  on  American  economic  conditions. 

F.  The  Great  War,  the  changed  economic  position  of  the  United 

States,  and  the  problem  of  the  tariff. 

Lippincott,  pp.  512-518;  Dewey,  References  on  the  Tariff  in  Chaps. 
XVIII,  XIX,  XX,  XXI;  Thompson,  pp.  402-408.  Magee,  Chap. 
XVII. 

XXII.  LABOR  AND  THE  PROBLEM  OF  INDUSTRIAL  DEMOCRACY 

A.  Rise  of  the  labor  problem  after  the  Civil  War. 

1.  Problems    raised    by    machine    production    and    the    factory 
system. 

a.  Growing  size  of  business  unit   and  loss   of  personal   rela- 
tionships between  employer  and  employee. 

b.  Machine  production  put  skilled  worker  at  a  disadvantage. 

c.  Employment    of    women,    children,    and    cheap    immigrant 
labor. 

2.  Decreasing    opportunities    for    settlement    of   public    land    in 
West. 

3.  Great  industrial  capitalists  in  control  of  industry  could  dictate 
terms  to  the  laborer  unless  he  was  re-enforced  by  collective 
bargaining. 

B.  Growth  of  labor  organizations  after  the  Civil  War. 

1.  Factors  contributing  to  the  growth  of  the  labor  movement. 

a.  Universal,  free,  compulsory  education. 

b.  A  labor  press,  advocating  organization  and  class  solidarity. 

c.  Improved  means  of  transportation  and  communication. 

2.  Growth  of  trade  unions, — about  forty  "nationals"  by  1870. 

3.  Early  attempts  to  organize  one  big  union. 

a.  National  Labor  Union,  1866-1872:    its  program;    causes  for 
failure. 

b.  The  Knights  of  Labor,  organized  18G9. 

Organization  and  aims. 

Its  program. 

Its  early  success  offset  by  dissension  and  disruption  over 

political  questions. 

4.  The  American  Federation  of  Labor. 

a.  Organized  in  1881,  although  present  name  not  adopted  until 
1886. 

b.  Organization:    a    federation   of    trade    unions    and    a    few 
industrial  unions. 

c.  Phenomenal  growth  in  membership. 

d.  Purposes  of  the  American  Federation  of  Labor. 

C.  Policies  and  methods  of  labor  unions  looking  toward  solution 

of  labor  problem. 

1.  General   aim:    to   advance    the    workers'    standard    of    living 
through  effective  collective  bargaining.     The  standard  of  liv- 

30 


LABOR  AND  INDUSTRIAL  DEMOCRACY 


ing  to  be  measured  by  the  scale  of  wages,  the  length  of  the 
working  day,  the  character  of  working  conditions. 

2.  Peaceful  methods  of  labor  unions  in  promoting  their  ends. 

a.  The  closed  shop. 

b.  Working  agreements  with  employers. 

c.  Voluntary  arbitration  with  employers. 

d.  Benefit  plans  for  their  members:    strike  benefits,  sickness 
and  unemployment  allowances,  etc. 

3.  Militant   methods   of   unions    in   attempting   to   enforce   their 
demands. 

a.  Strikes 

b.  Boycotts. 

D.  Attempts  of  employers  to   reach   a   solution  of  the  labor 

problem. 

1.  General    aim    of   employers:    to   have    practical    dictation    of 
terms  of   employment,  but  to  be  as  liberal  to   employees  as 
circumstances  require  and  as  profits  permit. 

2.  Peaceful  methods  of  employers. 

a.  Labor  managers  and  welfare  work. 

'b.  Profit  sharing  agreements,   bonuses,   sale  of  stock  to  em- 
ployees. 

c.  The  "company  union." 

d.  Voluntary  arbitration   agreements. 

e.  The  open  shop. 

3.  Militant  methods  of  employers  to  resist  or  destroy  labor  unions. 

a.  Lockouts. 

b.  Blacklists. 

c.  Espionage. 

E.  The    question    of    government    intervention    in    industrial 

problems. 

1.  Fields    in    which    government    intervention    appears    to    be 
necessary. 

a.  Protection   of   women,   children,  and  unskilled  men  in  in- 
dustry. 

b.  Industrial  education. 

c.  Unemployment. 

d.  Social  insurance  against  accident,  disease,  unemployment, 
etc. 

2.  The  interest  of  the  general  public  in  labor  disputes  and  the 
question  of  the  establishment  of  courts   of  compulsory  arbi- 
tration: example  of  the  Kansas  court  of  industrial  relations. 

3.  Government  interference  with  the  distribution  of  wealth, 
a.  Example   of   income  and   inheritance  taxes. 

4.  Question   of  government  regulation   of  conditions  of  employ- 
ment,— the  determination  of  maximum  hours  of  labor  and  of 
minimum  wages. 

F.  Labor  in  the  field  of  politics. 

1.  The   rise   and   growth  of  the    Socialist  Party  in   the  United 
States. 

a.  The  doctrines  of  Marxian  Socialism  and  the  formation  of 
the  Socialist  Labor  Party,  1872. 

b.  Formation  of  the  Socialist  Party,  1900. 

c.  Practical  program  of  American  Socialism. 

2.  Attempt  to  form  an  independent  labor  party. 

a.  Opposition  of  the  A.  F.  of  L. 

b.  Formation  of  the  Farmer-Labor  Party,  1920. 

31 


ECONOMIC  DEVELOPMENT  OF  UNITED  STATES 

G.  Growth  of  radical  unionism:  the  Industrial  Workers  of  the 
World. 

1.  Program  of  the   I.   W.   W.:    industrial    unionism;    eventually 
"One  Big  Union." 

2.  Goal  of  the  I.  W.  W.:  control  of  industry  by  the  workers. 

3.  Weapons  of  the  I.  W.  W.:  the  general  strike;  sabotage. 

Van  Metre,  Chap.  XXII;  Bogart,  Chaps.  XXIV  and  XXV;  Beard, 
Chap.  XXIV;  Thompson,  pp.  377-383;  Lippincott,  pp.  491-512. 
Magee,  Chap.  VII. 

XXIII.  BANKING  REFORM:  THE  FEDERAL  RESERVE  SYSTEM 

A.  Defects  of  the  National  Banking  System  revealed  by  its 

operations. 

1.  Decentralization  of  reserves. 

a.  Scattered  and  immobile  reserves. 

b.  Lack  of  a  central  reserve  agency. 

2.  Inelasticity  of  bank  credit. 

a.  Fluctuating  demand  for  bank  credit  not  provided  for. 

b.  Inelasticity  of  deposits  and  of  note  issues. 

c.  Unfortunate  results  of  inelasticity. 

3.  Defective  exchange  and  transfer  system. 

4.  Defective  banking  machinery  for  the  Federal  Government. 

a.  Wastefulness,     clumsiness,     and     dangers     of     independent 
treasury  system. 

B.  The    Federal    Reserve    System,    organization,    membership, 

management. 

1.  The  Federal  Reserve  Act,  December  1913. 

2.  The  Organization  Committee  and  its  work. 

3.  Organization  of  the  twelve  Federal  Reserve  Banks, 
a.  Capital  requirements  and  its  subscription. 

4.  Membership  in  the  Federal   Reserve   System. 

a.  Compulsory  for  national  banks. 

Special   privileges   were   offered   as   inducement  to  join, 
however. 

b.  Optional  for  state  banks  and  trust  companies. 

5.  Management  of  the  Federal  Reserve  Banks. 

a.  The  directors  and  the  manner  of  their  election. 

b.  Disposition  of  earnings  and  surplus. 

6.  The  Federal  Reserve  Board  and  the  Federal  Advisory  Council. 

7.  The  system  put  into  operation. 

a.  The  first  Federal  Reserve  Board. 

b.  Opening  to  business  of  the  Reserve  Banks,  November  16, 
1914,  which  Mr.  Warburg  called  our  "economic  Fourth  of 
July." 

c.  By  February  1915,  all  but  18  of  the  national  banks  of  the 
country  had  joined  the  system. 

8.  Amendments  to  the  Federal  Reserve  Act  a  result  of  experience. 

C.  The  Federal  Reserve  System  as  a  remedy  for  the  defects  of 

the  National  Banking  Act. 

1.  District  centralization  of  reserves. 

2.  Interdistrict  mobility  of  reserves. 

a.  Importance  of  the  rediscount  operations. 

32 


BANKING  REFORM 


3.  Elasticity  of  credit. 

a.  Federal  Reserve  notes. 

Methods  of  expansion  in  times  of  credit  stringency. 
Methods  of  contraction  in  face  of  over-supply. 
Promptness  of  redemption  under  ordinary   conditions. 

b.  Elasticity  of  deposit  credit. 

Elastic  reserve  requirements. 
Rediscounts  and  loans  to  member  banks. 
Contraction   of   deposit  credit   through   control   of   redis- 
count operations. 

c.  Federal  Reserve  bank-notes,  issued  in  1918  to  replace  the 
silver  certificates. 

4.  Domestic  exchange  under  the  Federal  Reserve  System. 

a.  Collection  services  of  the  Federal  Reserve  Banks. 

b.  The  Gold   Settlement  Fund  as  a   means  of  reducing   gold 
shipments. 

c.  Evils  eliminated  in  collections. 

Excessive  collection  charges. 

Expensive   maintenance   of   out-of-town  accounts. 

"Routing"  eliminated  and   the  "float"  reduced. 

5.  Services  of  the  Federal  Reserve  System  to  the  Federal  Gov- 
ernment. 

Van  Metre,  Chap.  XXVI;   White,  Chaps.  XIV  and  XXII;   Dewey, 
pp.  491-493   also   Chap.   XIII. 


XXIV.  AMERICAN  ECONOMIC  IMPERIALISM 

A.  Factors  in  the  development  of  American  imperialism. 

1.  Importance  of  the  American  industrial  revolution. 

a.  Large-scale  production  and  the  growing  importance  of  for- 
eign markets  for  "surplus"  production. 

b.  Increasing  importance  of  an  adequate  supply  of  certain  raw 
materials,  such  as  rubber,  nitrates,  oil.     The  sinews  of  the 
new  industry. 

c.  Development   of  financial  methods  and  credit  organization 
permit  of  colossal  enterprises  which  formerly  would  have 
been  beyond  the  range  of  possibility. 

d.  The  interests  of  capital,  capitalism,   and   capitalists.     The 
"export  of  capital"  the  heart  of  the  new  imperialism. 

e.  Contrast   between  the   new   industrial   and   capitalistic   im- 
perialism   with    pre-Civil    War    agricultural     imperialism. 
The  Mexican  problem  in  1845  and  in  1921. 

2.  Military  and  strategic  considerations. 

a.  The  Monroe  Doctrine  a  defensive  measure:  its  imperial  con- 
sequences. 

b.  Our  island  possessions  as  "naval  stations:"  naval  and  mili- 
tary importance  of  the  Panama  Canal. 

3.  Nationalist,  sentimental,  religious  considerations. 

a.  Nationalism  after  the   Civil  War   and  the  new  patriotism 
after  the  Spanish-American  War. 

b.  Defence  of  the  national  prestige:   the  punitive  expeditions 
into  Mexico. 

c.  "The   White    Man's   Burden:"    the   alleged    moral    duty  to 
spread    our    civilization    among    barbaric    or   semi-barbaric 
peoples. 

d.  Religious  and  humanitarian  motives. 

Medical    assistance:    the    sanitation    of    Cuba    and    the 
Panama  Canal  Zone,  e.  g. 

Education,  as  in  Porto  Rico  and  the  Philippines. 
Religious  zeal:   American  missions  in  the  East. 

33 


ECONOMIC  DEVELOPMENT  OF  UNITED  STATES 

B.  The  development  of  an  American  colonial  empire. 

1.  The  Spanish-American  War  a  turning-point  in  American  for- 
eign policy;  emergence  of  the  United  States  as  a  world  power. 

a.  Economic  causes  of  intervention  in  the  Cuban  revolt. 

b.  The  spoils  of  the  victors. 

2.  American  possessions  in  the  Caribbean. 

a.  Porto  Rico  an  American  colony  after  1898. 

b.  Cuba    practically    an    American    protectorate:     the    Platt 
Amendment,  1901. 

c.  The  Panama  Canal  and  the  Canal  Zone. 

Hay-Pauncefote  Treaty,   1901,  and   the  question  of  tolls. 
The  Colombian  tangle:  the  revolt  of  1903  in  Panama. 
Construction  of  the  Canal. 
Commercial  and  military  importance  of  the  canal. 

d.  American  occupation  of  Santo  Domingo. 

American  financial  interests  in  Santo  Domingo. 
American  "supervision"  of  the  elections  of  1914. 
The  military  occupation  of  1916. 
Present  status  of  Santo  Domingo. 

e.  American  occupation  of  Haiti. 

Marines  landed  to  "restore  order,"  1915. 
Continued  occupation  under  naval  officers. 

f.  Purchase  of  the  Danish  West  Indies,  1917. 

g.  The  protectorate  over  Nicaragua,  1916. 

h.  From  the  Canadian  border  to  the  Isthmus? 

3.  American  possessions  in  the  Pacific. 

a.  Purchase  of  Alaska,  1868. 

b.  Samoan  Islands  and  Guam,  1889. 

c.  Annexation  of  Hawaii,  1898. 

d.  Purchase  of  the  Philippines,  1898. 

e.  The  western  entrance  to  the  Panama  Canal. 

4.  Importance  of  the  colonial  possessions  of  the  United  States. 

a.  Estimate  of  their  economic  importance. 

b.  As  coaling  stations,  cable  stations,  naval  bases. 

C.  Imperial  interests  of  the  United  States  before  the  Great  War. 

1.  Imperialism  as  a  political  question. 

a.  "Dollar  diplomacy"  under  the  Republican  administrations. 

b.  The   repudiation   of   "dollar   diplomacy"    during   the   early 
years  of  the  Wilson  administration:  instance  of  the  refusal 
to  sanction  the  international  loan  to  China,  1913. 

2.  The  intricate  and  delicate  question  of  Mexico. 

a.  Conditions  making  for  instability  in  Mexico. 

b.  Foreign  investments  and  international  rivalries. 

c.  The  questions  of  oil  and  minerals. 

d.  American  policies  toward  Mexico. 

e.  The  present  outlook  for  the  regeneration  of  Mexico. 

3.  The  United  States  and  China. 

a.  Traditional  friendship  of  China  for  the  United  States:   be- 
lief of  China  in  our  disinterestedness. 

b.  American  economic  and   diplomatic  policy   toward   foreign 
intervention  in  China:  the  "open  door." 

c.  China  and  Chinese  integrity  as  a  source  of  friction  between 
the  United  States  and  Japan. 

4.  Pan-Americanism  and  the  problem  of  Latin-American  friend- 
ship, i  ..$£ 

D.  The  Great  "War  and  American  imperialism. 

1.  Definite  abandonment  of  our  traditional  policy  of  "isolation." 

2.  The  building  of  an  American  merchant  marine. 

3.  The  great  expansion  in  American  foreign  trade. 

34 


THE  GREAT  WAR 


4.  New  spheres  of  imperial  interest. 

a.  The  Near  East:  the  problem  of  the  Armenian  mandate;  the 
question  of  the  British  mandate  in  Mesopotamia  as  detri- 
mental to  American  oil  interests. 

b.  Yap  and  the  question  of  the  Pacific  cables. 

5.  American  naval  expansion  and  its  implications. 

E.  The  Washington  Conference  of  1921. 

Beard,  Chap.  XX,  pp.  592-596;  619-623;   Thompson,  pp.  471-481. 


XXV.    THE  UNITED  STATES  AND  THE  GREAT  WAR 

A.  Economic  effects  of  the  War  on  the  United  States,  1914-1917. 

1.  1914,  a  year  of  uncertainty  and  depression. 

a.  Interference    with    American    exportation    of    cotton    and 
grains. 

German  market  cut  off  and  other  markets  disorganized. 
"Buy  a  bale  of  cotton"  movement. 

Economic  effects  of  this  interruption  of  agricultural  ex- 
ports. 

b.  Falling  prices  of  industrial  metals:  copper,  lead,  zinc,  iron. 

c.  Shortage  of  shipping  for  our  export  trade. 

German  commerce  swept  from  the  seas. 

British  merchant  vessels  diverted  to  war  purposes. 

d.  Disturbed  state  of  domestic  and   foreign  exchanges. 

2.  The  return  of  prosperity,  1915-1917. 

a.  Rapid  expansion  of   basic   industries  to   meet   demands   of 
European  belligerents  for  munitions  of  war. 

b.  Exportation  of  American  foodstuffs  to  feed  the  armies  and 
population  of  Europe. 

c.  Impetus  to  shipbuilding  and  the  beginnings  of  a  new  mer- 
chant marine. 

d.  Absence  of  European  competition  in  American  market  and 
the  expansion  of  American  industry.     New  industries,  such 
as  the  production  of  dyes. 

e.  High  prices  as  an  indication  of  industrial  inflation. 

3.  The   belligerents    and    interference    with    neutral    trade:    the 
menace  of  the  submarine  to  the  war-time  commerce  and  pros- 
perity of  the  United  States. 

B.  Government  economic  policies  during  the  period  of  neutrality. 

1.  Taxation  and  the  currency. 

a.  Falling  revenue  from  the  tariff  and  the  need  for  new  taxes. 

The  Tax  Law  of  October  1914. 

b.  Increase  of  emergency  currency. 

2.  Encouragement  of  American  shipping. 

a.  Bureau  of  War  Risk  Insurance  established,  September  1914. 
to    assume    insurance    of    American    vessels    and    cargoes 
against  the  extraordinary  risks  of  the  War. 

b.  Act  of  August    1914,  admitting  foreign  ships  to  American 
registry. 

c.  Creation  of  the  United   States   Shipping  Board,   September 
1916. 

3.  Industrial  preparedness. 

a.  Council  of  National  Defence,  created  by  Act  of   Congress, 
August  1916. 

Membership  and  organization. 
Purposes  and  accomplishment. 

35 


ECONOMIC  DEVELOPMENT  OF  UNITED  STATES 

C.  National  mobilization  for  prosecution  of  the  War,  1917-1918. 

1.  Organization  of  the  United  States  Emergency  Fleet  Corpora- 
tion,  April   1917,   for   the   construction   of   merchant   vessels. 
"The  American  flag  on  the  seven  seas." 

2.  The  War  Industries  Board. 

a.  Created,  July  1917,  by  Council  of  National  Defence. 

b.  Reorganized,  March  1918,  as   independent  body. 

c.  Principal  activities:    priorities,  price  control,   classification 
of  industries  in  order  of  military  necessity,  etc. 

3.  Food  Control  Act,  August  1917. 

a.  Organization  of  the  United   States  Food  Administration. 

b.  Government  control  over  prices,  production,  distribution,  etc. 

4.  Far-reaching  act  creating  the  United  States  Fuel  Administra- 

tion, August  1917. 

a.  Problems    raised   in   the   supervision   of   production,   labor, 
prices. 

5.  Preservation  of  industrial  peace  in  the  interest  of  maximum 

production. 

a.  The  War  Labor  Board,  April  1918. 

Designed  to  preserve  peace  by  arbitration  and  concilia- 
tion of  disputes  between  employers  and  employees. 
Policies  on  which  it  was  determined  to  base  its  decisions. 

b.  The  War  Labor  Policies  Board,  May   1918. 

Intended  to  secure  unified  administration  of  labor  conditions. 

6.  Control  of  foreign  trade. 

a.  Regulations  of  exports  provided  by  the  Espionage  Act,  June 
1917. 

b.  Control  of  imports  under  the  Trading  with  the  Enemy  Act, 
October  1917. 

c.  Foreign  exchange  brought  under  Federal  control,  January 
1917. 

d.  Regulation  of  currency  and  bullion  exports,  September  1917. 

D.  Reaction  to  war  prosperity:  "readjustment"  and  "return  to 

normalcy/'  1918-1921. 

1.  "Overproduction"  and  the  industrial  crisis  of  1920-1921. 

2.  The  "favorable"  exchange  rate  becomes  a  hindrance  to  foreign 

trade. 

3.  "Readjusted"  wages  and  labor  discontent. 

Van  Metre,  Chap.  XXVII;  Lippincott,  Chap.  XXVII. 


XXVI.  COMMERCIAL  EXPANSION  AND  FOREIGN  TRADE 

A.  Characteristics  of  the  foreign  trade  of  the  United  States, 
1860-1914. 

1.  Five-fold   increase  in  combined  exports  and   imports. 

2.  Changing  character  of  commodities  of  foreign  trade. 

a.  Exports. 

Relative,  although  not  absolute,  decline  in  exports  of  agri- 
cultural products;   reasons  for  this. 
Relative  and  absolute  increase  in  exports  of  manufactured 
articles;  reasons  for  this. 

b.  Imports. 

Increasing  importation  of  raw  materials  and  partly  manu- 
factured products. 

Manufactured  articles  ready  for  final  consumption  repre- 
sented a  declining  percentage. 


THE  WAR  AND  FOREIGN  TRADE 


3.  Decline  of  the  American  merchant  marine. 

a.  Decline  of  the  merchant  marine  by  %,  1860-1912,  while  the 
foreign  trade  of  the  nation  was  multiplying  six  fold. 

b.  American  vessels  carried  less  than  10%  of  our  imports  and 
exports. 

4.  The  "favorable"  balance  of  trade  and  its  settlement. 

a.  Excess   of  exports   over   imports   amounted   to   almost   five 
hundred  million  dollars  before  the  war. 

b.  Methods  by  which  Europeans  offset  this  balance. 

Freights  earned  by  European  ships  and  premiums  earned 

by  European  insurance  companies. 

Interest  due  on  foreign  investments  in  the  United  States. 

Remittances  of  immigrants,  expenses  of  American  tourists, 

etc. 

5.  Attempts  of  the  Government  to  encourage  foreign  trade. 

a.  Creation  of  the  Department  of  (Commerce  and  Labor,  1903. 

b.  Creation  of  a  separate  Department  of  Commerce,  1913. 

c.  Important   work  of  the  Bureau  of  Foreign  and   Domestic 
Commerce  since  1912. 

Improvement  of  the  Consular  Service. 

Collection  and  dissemination  of  information  on  economic 

conditions  abroad. 

d.  Provision   of   the   Federal   Reserve   Bank   allowing   certain 
national  banks  to  establish  foreign  branches. 

B.  The  Great  War  and  the  foreign  trade  of  the  United  States. 

1.  Tremendous  growth  in  our  export  trade:  increase  of  total  for- 
eign trade  by  almost  ten  billion  dollars  at  a  time  when  imports 
fell  off  comparatively. 

2.  Phenomenal  increase  in  the  merchant  marine. 

a.  Tonnage  increased  more  than  16  fold,  1912-1920. 

b.  Influence  of  Government   aid  through  the  Shipping  Board 
and  the  Emergency  Fleet  Corporation. 

c.  The  Merchant  Marine  Act,  1920. 

3.  Remarkable  alteration  in  the  exchange  situation. 

a.  Tremendous  increases  in  the  favorable  balance  by  trade. 

b.  Increases  in  our  exports  only  partially  offset  by  other  factors. 

Gold  shipments  to  United  States. 

Sale  of  American  securities  held  abroad. 

United  States  Government  advances  to  the  Allies. 

Expenses   of    maintaining    the   American    Expeditionary 

Forces. 

c.  Why  the  exchange  rate  and  the  balance  of  trade  cannot  be 
adjusted  by  the  methods  of  1914. 

4.  The  United  States  a  creditor  nation;   indebtedness  of  rest  of 
world  to  this  country  amounts  to  something  between  twelve 
and  fifteen  billion  dollars.     Implications  of  this  and  the  im- 
portance of  these  implications  in  the  determination  of  future 
economic  policies. 

C.  Government  encouragement  of  foreign  trade  during  the  War 

and  after. 

1.  Export  Trade  Act  (Webb  Act),  April  1918. 

a.  An  amendment  to  Sherman  and  Clayton  Anti-Trust  Laws, 
permitting  exporters  to  combine  for  competition  with  for- 
eign combinations,  subject  to  limitations  of  the  Act  and  con- 
trol of  the  Federal  Trade  Commission. 

b.  Combinations  formed  as  a  result  of  the  Act. 

2.  Edge  Act,  December  1919. 

a.  An  amendment  to  Federal  Reserve  Act,  permitting  the  char- 
tering of  banking  corporations  for  financing  of  export  trade, 
subject  to  the  supervision  of  Federal  Reserve  Board. 

37 


ECONOMIC  DEVELOPMENT  OF  UNITED  STATES 

b.  Designed  particularly  to  finance  foreign  purchases  by  the 
granting  of  long-term  credits,  rather  than  by  ordinary  ad- 
vances against  shipments,  commercial  credits,  etc. 

3.  War  Finance  Corporation  Act  April  1918,  amended  March  1919. 

a.  The   Corporation    originally    designed   to   finance    domestic 
industries  considered  essential  for  prosecution  of  the  war. 

b.  The  amendment  of  March  1919,  authorized  advances  not  to 
exceed  one  billion  dollars,  to  exporters  and  bankers  for  the 
purpose  of  promoting  export  trade. 

Bogart,  Chaps.  XXIX  and  XXX;  Lippincott,  Chap.  XXVI;  Thomp- 
son, pp.  428-435,  479-482. 


XXVII.  SOME  CONTEMPORARY  SOCIAL  AND  ECONOMIC  PROBLEMS 

A.  Relationship  of  the  United  States  to  the  economic  reconstruc- 
tion of  Europe. 

1.  The  terrible  cost  of  the  Great  War. 

a.  The  human  cost. 

The  killed,  maimed,  and  disabled. 

The  sick;   increased  mortality  due  to  undernourishment, 

starvation,  exposure,  disease.    The  frightful  toll  among 

the  children  of  the  new  generation. 
The  insane  and  the  morally  depraved. 

b.  The  economic  cost. 

The  loss  in  production  during  the  years  of  the  War! 
The  money  loss. 
Destruction  and  devastation. 

2.  Reaction  of  economic   conditions   in   Europe   upon   American 
prosperity. 

a.  Pre-war  Europe  as  a  source  of  capital,  raw  materials,  and 
manufactured  articles,  and  as  the  best  market  for  American 
products. 

b.  Economic  reconstruction  of  Europe  essential  to  the  United 
States. 

c.  Humane  considerations:  the  necessity  for  feeding  the  starv- 
ing and  clothing  the  naked. 

3.  Financing  Europe  during  the  period  of  reconstruction. 
a.  The  necessity  of  long-term  credits. 

4.  The  problem  of  the  exchange  rate  and  the  tariff. 

a.  How  the  exchange  rate  interferes  with  economic  reconstruc- 
tion of  Europe. 

b.  Impossibility  of  adjusting   the  rate   by   methods  of    1914; 
necessity  of  resorting  to  other  methods. 

Loans  and  credits. 

Funding  or  cancellation  of  outstanding  obligations  to  the 

Government  of  the  United  States. 

c.  The  crucial  question  of  the  tariff. 

The  tariff  help  or  hindrance  to  American  industry? 

5.  The  crushing  burden  of  armament. 

a.  Growth  of  military  and  naval  expenditures  since  the  War. 
?,  Expenditures  in  1921  compared  with  1912:  France  shows 

increase  of  1085%,  Great  Britain  794%,  Italy  188%,  Japan 

300%,  United  States  2413%. 

Proportion  of  military  expenses  to  all  other  expenses  of 

government. 

b.  Can  a  world  in  economic  reconstruction  stand  the  burden? 

c.  Disarmament  as  an  American  policy. 


CONTEMPORARY  PROBLEMS 


B.  Problems  of  public  finance  in  the  United  States. 

1.  Inflation  of  the  currency  and  the  "high  cost  of  living." 

a.  Causes  of  and  remedies  for  inflation. 

b.  Deflation  and  the  crisis  of  1920-1921. 

c.  Further  problems  of  readjustment. 

2.  Taxation. 

a.  Reduction  of  taxation  as  a  factor  in  industrial  prosperity. 

b.  Reduction  of  governmental  expenditures  essential.     A  na- 
tional budget  as  a  curb  on  governmental  extravagance  and 
inefficiency. 

c.  Repeal  of  excess  profits,  income  surtaxes,  luxury,  and  trans- 
portation taxes?    Other  forms  of  taxation. 

3.  The  tariff  as  a  fiscal  and  industrial  question. 

a.  Possibilities  of  the  tariff  as  a  revenue-producer. 

Will  the  effect  be  to  shut  off  imports  and  ruin  the  Ameri- 
can carrying  trade? 
If  the  tariff  does  produce  revenue,  who  will  pay  the  tax? 

b.  Question   of  the  necessity  of   protection   for  American    in- 
dustry. 

c.  The  Fordney-McCumber   Tariff. 

C.  Problems  of  population  and  its  distribution. 

1.  War-time  migration  of  agricultural  population  to  the  cities. 

a.  Effect  of  this  migration  on  agricultural  production. 

b.  Congestion  in  the  cities  and  after-the-war  unemployment. 

2.  The  problem  of  housing. 

a.  Causes  of  housing  shortage  in  the  cities. 

Increasing  population. 

Cessation  of  construction  of  dwellings  during  the  War. 

b.  The  economic  causes  of  high  rents. 

c.  Government  intervention  in  the  housing  shortage. 

New  York  State  rent  legislation. 

Tax  exemption  for  mortgages  and  for  new  dwellings. 

Government  credit  for  home-building? 

d.  The  need  for  advanced  standards  in  building  construction. 

3.  Immigration. 

a.  Pre-war  immigration  and  its  character. 

b.  Methods  of  restriction. 

c.  Relationship  of  immigration  to  the  labor  problem. 

d.  Immigration  and  "Americanization." 

D.  Human  problems  of  industrial  reconstruction. 

1.  Women  in  industry. 

a.  The  influence  of  the  war  on  the  employment  of  women  in 
gainful  occupations. 

b.  The  need  for  the  protection  of  women  in  industry. 

Reasons  for  special  consideration  for  women. 
Protection  by  organization  and  legislation. 

2.  Child  labor. 

a.  The  employment  of  children  in  industry. 

As  workers  in  Southern  cotton  mills. 

As  agricultural  workers  and  domestic  servants. 

As  clerks,  messengers,  and  in  the  street  trades. 

b.  The  dangers  of  the  employment  of  children. 

c.  The  Federal  Child  Labor  Law  of  1916,  prohibiting  interstate 
and  foreign  commerce  in  the  products  of  child  labor.     De- 
clared unconstitutional  by  the  Supreme  Court. 

d.  Need    for   state   and   federal   legislation    assuring   adequate 
academic  and  vocational  training. 

3.  Labor  organization  and   the  problem   of  control   in   industry- 

4.  The  problem  of  social  legislation. 

39 


ECONOMIC  DEVELOPMENT  OF  UNITED  STATES 

B.  The  railroads  and  problem  of  transportation. 

1.  Government  ownership  and  operation  of  the  railroads? 

a.  Arguments  for. 

b.  Arguments  against. 

2.  Private  ownership  under  government  support  and  regulation? 

3.  Government  ownership  and  operation  by  executives   and  em- 
ployees:  the  Plumb  Plan? 

4.  The  importance  of  low  passenger  and  freight  rates. 
Beard,  Chap.  XXII. 


40 


MEMORANDA 


41 


MEMORANDA 


42 


MEMORANDA 


43 


MEMORANDA 


44 


14  DAY  USE 

RETURN  TO  DESK  FROM  WHICH  BORROWED 


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Renewed  books  are  subject  to  immediate  recall. 


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